This chapter discusses the trade‑offs involved in implementing policies to improve the quality of financial advice and how countries have tried to balance the potential impact on access to advice and its affordability given the benefits and the barriers for individuals to seek advice. It also highlights other measures that can support and protect those who do not receive financial advice. The chapter concludes with policy implications for how regulators can balance these trade‑offs and promote good financial outcomes in retirement for all.
OECD Pensions Outlook 2026
Are We Saving Enough for Retirement?
Abstract
Financial decisions for retirement are complex, and financial advice can be a valuable resource to help individuals plan for retirement and choose appropriate investments and financial products. Indeed, retirement planning is one of the main reasons that individuals seek financial advice. However, the benefits of financial advice are more likely to be realised when advisers appropriately manage any conflicts of interest and provide advice in the consumer’s best interest.
The regulatory framework should include measures to ensure that conflicts are managed and to promote the quality of financial advice.1 However, these measures may also have unintended consequences impacting the access to and affordability of advice. To understand the potential trade‑offs, it is important to understand the benefits of financial advice and under what conditions those benefits are likely to materialise to ensure that policies are designed to maximise those benefits. Measures such as qualification requirements, duty of care standards, disclosure requirements, and remuneration restrictions can have a positive impact on the quality of advice, but there are numerous challenges to ensure their effectiveness and avoid negative spillover effects. To gauge to what extent these negative impacts may present barriers to access to advice, it is also necessary to understand the reasons people do not seek advice. While implementation should strive to minimise negative consequences, there will always be individuals who will not access advice, so measures are also needed to offer support and protections to those individuals.
This chapter discusses how policymakers can balance the trade‑offs involved in ensuring the quality of financial advice for retirement while minimising the barriers for individuals to access advice. The first section looks at the benefits of financial advice. The second section considers how adviser bias can undermine those benefits and lead advisers to provide recommendations that may not be in the best interest of consumers. The third section describes the measures that jurisdictions are taking to promote the benefits of financial advice and mitigate conflicts of interest, as well as the effectiveness of those measures and the challenges relating to their implementation. The fourth section examines the barriers for individuals to seek financial advice. The fifth section highlights complementary measures to support individuals not receiving advice. The final section discusses policy implications given the evidence and experiences presented.
Retirement planning is one of the most common reasons for individuals to seek financial advice, and advisers can significantly contribute to improving financial outcomes in retirement. Advisers can help individuals plan for retirement by encouraging savings for retirement and designing a decumulation plan. They can improve investment returns over the long-term by encouraging appropriate levels of investment risks. They can also contribute to improved financial behaviours and well-being by mitigating emotional reactions and reducing the financial stress of their clients.
4.1.1. Better financial planning for retirement
Advisers play a role in helping individuals to better plan for retirement by increasing savings and helping individuals to stick to a long-term financial plan. Advisers encourage individuals to open retirement savings accounts and take advantage of tax benefits and other financial incentives. At retirement, advisers can promote the use of annuities for longevity protection and optimise drawdown strategies considering an individual’s overall financial situation.
Financial advice seems to be particularly beneficial for retirement by helping to raise awareness of retirement preparedness and encourage individuals to develop a financial plan for retirement. Evidence indicates that individuals consulting a financial adviser are more likely to evaluate how much they will need for retirement and to establish specific financial objectives for their retirement, resulting in higher replacement rates (Martin and Finke, 2012[1]; Harlow, Brown and Jenks, 2019[2]). Such benefits are, however, contingent on individuals consulting an adviser early enough in their career to effectively plan (Invesco, 2024[3]).
Financial advisers encourage their clients to save more and save more regularly. Advised clients tend to save more, and are generally more likely to have emergency savings and to be more financially resilient (Schmeiser and Hogarth, 2013[4]; Liu et al., 2018[5]) Advisers can also influence savings behaviours by encouraging the use of automatic savings plans (Foerster et al., 2014[6]). The impact of advice on savings can be higher for individuals that have lower levels of self-control and who are less likely to have a regular savings habit (Liu et al., 2018[5]).
The benefits from increased savings, however, are more likely realised when advisers provide comprehensive advice on an ongoing basis rather than for clients receiving one‑off advice to invest in a particular product or fund. This observation is consistent with advisers helping clients to develop and stick to a long-term financial plan and is particularly relevant for planning for retirement (Martin and Finke, 2012[1]; Montmarquette and Viennot-Briot, 2015[7]).
Advisers may also help improve the tax efficiency of clients’ investments and ensure they take advantage of financial incentives available to them. This is especially relevant for retirement, as retirement savings accounts are often tax-advantaged or otherwise incentivised. Studies in New Zealand, Switzerland and the United States have found a positive link between receiving financial advice and saving in a retirement plan (Fang, Hao and Reyers, 2022[8]; Hoechle et al., 2023[9]; Martin and Finke, 2012[1]).
Furthermore, there is significant potential for financial advisers to add value at retirement and help individuals to optimise their withdrawal and payout strategies in retirement. Advised retirees are more likely to account for more variables in their drawdown strategy, such as investment risks and tax implications (Invesco, 2024[3]). Indeed, taking a more comprehensive approach to financial planning in retirement can have a material impact on retirement incomes. A large US financial services firm has outlined five key areas where financial advisers can have significant added value at and during retirement: 1) allocating assets in a tax-efficient manner; 2) considering total wealth in asset allocations; 3) ensuring protection against longevity risk; 4) allowing for a dynamic withdrawal strategy; and 5) optimising the portfolio for the retirement objective by accounting for risks like inflation and currency. It estimates that improving withdrawal decisions across these areas could increase retirement income by over 20% compared to a static drawdown strategy (Blanchett and Kaplan, 2013[10]).
Another added value of using financial advisers for retirement can be an increased awareness and use of annuity products that protect retirees from longevity risk. Clients of financial advisers in the United Kingdom were more likely to have some knowledge of annuities, with around two‑thirds indicating they knew at least a little about annuities compared to around 40% of unadvised clients. Furthermore, advised clients were more likely to consider an annuity at retirement (iPipeline & Standard Life, 2025[11]). Among mass affluent clients in Brazil, Japan, Mexico and the United States, advised clients are two times more likely to incorporate annuities in their retirement strategy and are generally less sceptical of the value that annuities offer compared to non-advised clients (Prudential, 2025[12]).
4.1.2. More appropriate risk taking
Advised consumers tend to have more appropriate risk exposures in their portfolios, with advisers often promoting lower levels of cash reserves and higher allocations to equity, increasing the wealth they can accumulate over the long run. Advised investors in Germany and in New Zealand have higher equity allocations (Zhang, 2014[13]; Liu et al., 2018[5]). More generally, advice may help investors to invest with an appropriate level of risk (Pagliaro and Utkus, 2019[14]).
A longer-term relationship with an adviser is positively correlated with increased risk taking. Advised investors in Canada have higher equity allocations and lower cash holding than unadvised investors, and those having worked with their adviser for the longest period have the highest allocations (Foerster et al., 2017[15]). US investors using a financial adviser over a decade have higher net worth than unadvised investors due to a greater portfolio allocation to equities (Cummings and James, 2014[16]).
However, advisers seem to have less influence on improving risk-taking for clients with lower levels of financial literacy. Financial advice seemed to have less of an impact on asset allocation for KiwiSaver members in New Zealand when controlling for financial literacy (Fang, Hao and Reyers, 2022[8]). Similarly, financial advice for investors in China only increased the stock market participation of households with higher levels of financial literacy who had a preference for asset diversification (Pan, Wu and Zhang, 2020[17]).
Gender dynamics may also influence the extent to which advisers overcome the risk aversion of their clients. Wealthy women in the United Kingdom working with male advisers report more risk aversion and have higher allocations to risk-free assets, whereas women working with female advisers have higher risk tolerance and lower allocations to risk-free assets than men do (Baeckström, Marsh and Silvester, 2021[18]).
4.1.3. Emotional benefits
Investors with a financial adviser are also less likely to succumb to emotional reactions in market downturns and stay invested. Advised consumers are also generally less stressed about their finances and experience higher levels of well-being.
Financial advisers can help clients to remain calm during periods of market turmoil and encourage them to stay invested rather than sell their assets in panic. Analysis of data of defined contribution plan members in the United States during the market turmoil caused by the COVID‑19 pandemic showed that investors with access to an adviser were significantly less likely to trade than investors who did not have access to an adviser (Blanchett, Finke and Liu, 2022[19]). Evidence of investors in Canada showed that households who kept their adviser between 2010 and 2014, during the market turmoil following the global financial crisis, managed to grow their assets by 16.4% during the period, compared to only 1.7% for households who dropped their adviser during the same period (Montmarquette and Prud’Homme, 2020[20]). Furthermore, as with savings, a longer-term relationship with an adviser may be more effective at encouraging beneficial financial behaviours. Another study of Canadian investors showed that clients who changed advisers during the 2008 global financial crisis were less likely to remain invested in the stock market during the crisis than those who retained the same adviser over the period (Foerster et al., 2017[15]).
Studies form the United States indicate that advised clients experience lower levels of stress related to their finances and emphasise this emotional component the most when assessing the value of advice (Pagliaro and Utkus, 2019[14]). One analysis estimated that emotional outcomes represent 45% of total perceived value from advice, with self-directed investors nearly twice as likely to report high levels of financial stress compared to advised investors, who report having more peace of mind (Costa, Martino and de la Fuente, 2025[21]). While investors do not necessarily prioritise such benefits in selecting their adviser, they do seem to value them in hindsight. When individuals are asked to think about what value they received from their adviser they are more likely to highlight their sense of security and peace of mind (Murphy, Lamas and Sin, 2020[22]). When asked to think about perceived value in the relationship with their adviser, the highest ranked statements included an emotional component such as trust, connection, or reassurance (Pagliaro and Utkus, 2019[14]).
Clients using professional financial advisers also tend to experience higher levels of well-being. Those who receive advice from financial professionals have higher levels of financial well-being as measured by their ability to meet financial obligations, feeling of financially security and life enjoyment (Stebbins, Kim and Seay, 2022[23]). They can also have higher levels of subjective well-being, especially those who consider themselves to be less knowledgeable about finances (Schepen and Burger, 2022[24]). Advised clients also feel more confident about their retirement planning and preparations (Adfiz, 2025[25]; Blanchett, 2025[26]; BNY Investments, 2024[27]; Aegon, NextWealth & Richard Parkin Consulting, 2023[28]).
Financial advice does not always result in objectively better financial outcomes. Adviser-recommended products may fail to deliver higher net risk-adjusted returns. Additionally, advisers may fail to counter the biases of their clients, demonstrating biases such as return chasing and loss aversion themselves. Conflicts of interest can exacerbate these tendencies and result in worse financial outcomes for consumers.
4.2.1. Failure to improve returns
While advisers may be expected to contribute to higher returns on investment by recommending products offering higher risk-adjusted returns, much evidence globally indicates that financial advice does not always result in objectively better net returns than comparable self-selected investments. Rather, advised investments tend to perform worse than benchmark investments, earn lower net risk-adjusted returns, and increase portfolio variance (Hoechle et al., 2016[29]; Hackethal, Haliassos and Jappelli, 2011[30]; Foerster et al., 2014[6]; Hoechle et al., 2018[31]). Advised clients tend to also trade more frequently (Hoechle et al., 2016[29]; Allie, West and Willows, 2016[32]).
The observation that advised trades do not result in higher net investment returns is largely attributed to the existence of conflicts of interest leading advisers to recommend products or investments that may also benefit them financially. Studies have shown that advisers more often recommend in-house products generating the highest profits for the provider or products providing the adviser with higher commissions (Hoechle et al., 2018[31]; Battiston et al., 2025[33]).
The negative impact of conflicts of interest may be more harmful for women and those with lower financial literacy. A study of German bank clients revealed that advisers more often recommend expensive in-house funds to female and less-educated clients (Bucher-Koenen and Koenen, 2023[34]).
4.2.2. Failure to counter investor biases
While advisers can aid in helping investors to stay invested during a crisis, they are not necessarily effective at countering other investor biases that may lead to harmful trading behaviours. Canadian financial advisers demonstrated that they tended to invest with the same biases as their clients. Their investment strategies often chased returns, invested in expensive funds, and did not sufficiently diversify their portfolio (Linnainmaa, Melzer and Previtero, 2021[35]). Another study revealed that advisers tended to more frequently recommend that clients realise gains rather than cut losses (Andries, Bonelli and Sraer, 2024[36]).
The conflicts of interest of advisers can exacerbate their failure to de‑bias clients. One study in the United States found that advisers encouraged chasing returns rather than adequate diversification and recommended more expensive funds when it was in their financial interest to do so (Mullainathan, Noeth and Schoar, 2012[37]).
In addition, advisers are not always helping clients to overcome their reluctance to purchase an annuity. In the United Kingdom, 11% of advisers never recommend annuities (BNY Investments, 2024[27]). In Canada, three‑quarters of advisers do not often recommend them, though advisers also indicate they are now recommending them more often as pricing improves (Aegon, NextWealth & Richard Parkin Consulting, 2023[28]).
The benefits of financial advice are less likely to be realised if advisers are not qualified or face unmanageable conflicts of interest. As such, regulatory frameworks generally impose requirements on financial advisers to ensure the quality and appropriateness of advice (Figure 4.1).2
Licensing and qualification requirements are important to aid in the effective oversight of advisers and to ensure that advisers have sufficient knowledge and skills to provide quality financial advice. Licensing requirements for financial advisers often depend on the type of activity carried out. Registration requirements allow consumers to search for a financial adviser and ensure that the adviser is licensed and appropriately qualified. Most jurisdictions have minimum qualification or education requirements for financial advisers, and requirements for specific certifications are common. Continued professional development is sometimes required to ensure that advisers keep their knowledge up to date, and several jurisdictions include ethics as part of their qualification criteria.
Financial advisers are also normally subject to duty of care standards that require the adviser to provide advice in a manner that intends to improve financial outcomes for the recipient of advice. Duty of care standards typically require the adviser to act honestly, treat the consumer fairly, and provide advice that is suitable for the consumer’s financial situation. Advisers can also be subject to more stringent requirements to act in the best interest of their client and put the client’s interests above their own, which is commonly referred to as fiduciary duty, though the specific legal requirements to carry out those duties can vary. In addition, advisers are often subject to requirements to avoid, manage or mitigate any conflicts of interest that could potentially impair their ability to act in the best interests of their client. Requirements often define factors that advisers need to consider, in order to ensure the suitability of their recommendations to clients, which can vary depending on the context and scope of advice provided.
Disclosure requirements relating to the provision of financial advice aim to ensure that consumers have adequate information to assess whether the advice provided is appropriate for them as well to provide transparency around what they are paying for to promote fair competition. Many disclosure requirements aim to highlight any potential conflicts of interest in the advice provided, particularly as they relate to adviser remuneration. Disclosures also aim to ensure transparency around the cost that consumers will pay for the product or service and advice received. Other requirements such as standardised formats for disclosures aim to help consumers better understand the information and advice provided.
Regulatory requirements have increasingly targeted the remuneration formulas for financial advisers as a complementary measure to duty of care and disclosure requirements. Such measures aim to explicitly limit remuneration models that can represent an unmanageable conflict of interest for advisers to act in the best interests of their clients. They may require that the remuneration provided avoid a risk of a conflict of interest that could lead the adviser to neglect the best interest of the consumer. Measures to restrict the allowed remuneration formulas often target commission payments that product manufacturers pay to financial advisers for the successful distribution of the product, either with restrictions on specific compensation structures or caps or bans on commissions.
Each of these measures has demonstrated some effectiveness at improving outcomes for those taking financial advice. However, each also presents challenges to ensure their effective implementation while minimising negative impacts on access to advice. Automated advice platforms have significant potential to improve access to advice, but developments related to the use of artificial intelligence for financial advice may challenge existing regulatory frameworks (Box 4.1).
The emergence of robo‑advice platforms, which provide and implement investment recommendations based on user-provided information about their personal characteristics and investment objectives, provide a more accessible and cost-effective alternative to traditional financial advice. However, they also present challenges for the application of existing regulatory frameworks, which need to ensure the risks these platforms present are managed (OECD, 2017[38]). Automated financial advice is now evolving further with the use of artificial intelligence, particularly large language models (LLMs), to provide financial advice and recommendations to consumers. However, the lack of consistency and explainability of the outputs of these models may present significant risks to consumers. In addition, such models challenge the advice boundary and the application of existing regulatory frameworks. The OECD’s Working Party on Insurance and Pensions will be investigating these issues in more detail.
4.3.1. Effectiveness of licensing and qualification requirements and implementation challenges
Licensing and qualification requirements have notably improved the competence of financial advisers. Nevertheless, challenges remain to ensure consistency in requirements and the continued supply of advice.
Licensing and qualification requirements have transformed financial advice into a profession rather than a sales role, increasing the competence of advisers and contributing to improved trust in financial services. There is evidence that the introduction of higher qualification standards has led to improved quality of advice in the United Kingdom. Nearly all advisers have complied with the new standard, and both satisfaction and trust in advice have risen, though the other measures taken have likely also contributed to this trend (FCA, 2020[39]). Membership in professional bodies also increased (FCA, 2014[40]). In Australia, advisers feel that qualification requirements have made financial advice services a profession, leading to higher quality of advice.3
Registration requirements for licensed advisers can also facilitate finding a qualified adviser and verifying their credentials. For example, in Canada consumers can see what products or services advisers can offer based on their registration, and the United Kingdom’s Retirement Adviser Directory allows people to find advisers to help them specifically for retirement planning. The Financial Advisers Register in Australia allows consumers to verify advisers’ authorisation and check their qualifications, membership of professional bodies and regulatory disciplinary actions.
However, licensing and qualification requirements that vary depending on the adviser’s activity can result in an uneven playing field. In Belgium, for example, the regulatory framework for financial planners who are defined as providing independent advice services to non-professional clients is more restrictive than the standards applying to banks that offer the same services to their clients, with a specific code of conduct applying to financial planners. There have been few applications for the specialised licenses (European Commission, 2016[41]). Having consistent licensing requirements for providers can promote a more even playing field and facilitate enforcement and sanctions where the advice has resulted in harm (Levy, 2023[42]). New Zealand harmonised its licensing requirements in 2019 following such concerns, however, individuals providing advice only to wholesale clients are still not required to operate with a license.
A lack of regulation regarding the titles and allowed certifications that financial advisers use to describe their activities can lead to consumer confusion about the adviser’s qualifications and services provided. Prior to the introduction of Regulation Best Interest in the United States, there was no real constraint for broker-dealers to call themselves financial advisers. Now, broker-dealers may no longer use the term adviser in their titles unless they are dual-registered as an investment adviser.4 Canada has also moved to regulate titles, with the 2019 reforms restricting the use of non-regulated titles based on sales activities, though they are still working to further define appropriate titles. Ireland explicitly bans commissions for anyone describing their activities as independent, in line with the MIFID II remuneration restrictions for independent advisers (Central Bank of Ireland, 2019[43]). South Africa has distinguished between registered financial advisers who operate independently and product supplier agents who are tied to specific providers (FCSA, 2019[44]). The use of non-regulated certifications can also be a concern. In the United States, registered advisers can hold over 250 different certifications, and no specific certification is required by regulation. Evidence suggests that some certifications are associated with higher levels of misconduct and therefore serve no purpose in signalling adviser quality to consumers (Egan, Matvos and Seru, 2024[45]).
Stricter qualification requirements can, however, lead to a reduction in the number of advisers, as those unwilling or unable to meet the requirements exit the market. The number of advisers in Australia decreased by over 40% over 2018-2022 following the introduction of the new educational requirements (The Treasury, 2023[46]). While there were initial concerns that the increased requirements in the United Kingdom would similarly lead to a reduction in the number of advisers, the number of retail investment advisers increased by nearly 8% over the period of 2016-2023 (FCA, 2024[47]).
A potential decline in adviser numbers resulting from increased qualification requirements is positive to the extent that advisers without adequate knowledge and skills exit the market. However, it can be challenging to ensure an adequate supply of advice. Following the observed decline in Australia, the government modified the requirements to better recognise knowledge gained through experience. Specifically, they removed tertiary education requirements for advisers with 10 years of experience and no record of misconduct (The Treasury, 2023[46]). The Australian Government has also recently consulted on proposals to further streamline the education requirements which would require the study of financial advice subjects rather than a dedicated financial advice degree (Australian Treasury, 2026[48]).
4.3.2. Effectiveness of duty of care standards and implementation challenges
Duty of care standards have led to improvements in the appropriateness and quality of the financial advice provided. Nevertheless, advisers are sometimes ineffective at identifying conflicts and assessing suitability, and are reluctant to provide advice or guidance in some contexts.
Imposing duty of care requirements can have a material impact on the quality of advice provided. Evidence in the United States leading up to and following the introduction of Regulation Best Interest, which raised the duty of care standards for broker-dealers to a best interest standard, indicates that there was an increased focus on the cost and value of products and investment flows into more expensive investments or products reduced (Sethi, Spiegel and Szapiro, 2019[49]; Egan, Ge and Tang, 2020[50]; Barbu, 2022[51]). The increased focus on cost also changed product offerings, with brokers eliminating some higher cost or proprietary products (Crabb, 2017[52]). Other providers modified their remuneration structures to mitigate conflicts of interest (Deloitte, SIFMA, 2020[53]).
Although duty of care standards can improve the quality of advice on average, advisers may still have a hard time identifying and managing conflicts of interest that could impede their ability to act in the best interests of their clients. The Client Focused Reforms passed in 2019 in Canada introduced an explicit requirement to resolve material conflicts of interest. However, many advisers failed to identify material conflicts or had inadequate policies in place to address conflicts (CSA and CIRO, 2023[54]). In Australia conflicts of interest continued to negatively impact the quality of advice despite the introduction of a best interest duty for advisers providing personal advice, though the situation improved with time (ASIC, 2018[55]; Levy, 2023[42]).
Advisers may also fail to adequately assess suitability. Well-developed internal processes can help, particularly for more complex questions. In the United Kingdom, advisory firms were more likely to provide a suitable recommendation when following internal processes to help them provide more consistent advice to different client profiles for complex issues such as retirement. These approaches include having a Centralised Retirement Proposition, which guides advisors through some of the complex questions that need to be addressed in advising on retirement, or a Centralised Investment Proposition which is similar but focussed on investment-based solutions rather than insurance options like annuities (FCA, 2024[56]).
Many jurisdictions have struggled to find a balance between ensuring that duty of care standards provide adequate consumer protections and allowing advisers to follow efficient procedures in carrying out their duties to minimise compliance costs. Australia introduced safe harbour rules that are one of the ways that advisers can take to prove that they have acted in their client’s best interests when providing advice.5 However, the Quality of Advice Review published in 2023 found that these requirements encouraged advisers to approach the fulfilment of their duty of care as a checklist rather than focussing on making sure they were truly acting in the client’s best interest, and thereby rendered the standard less effective in promoting quality financial advice (Levy, 2023[42]).
Duty of care requirements often vary across different distribution channels or products, meaning that individuals do not necessarily have the same levels of protections in different advice contexts. Until the passage of Regulation Best Interest in the United States, broker-dealers were subject only to a suitability standard and were not required to consider the best interest of their client or put those interests above their own interest, despite providing similar services as registered advisers (Egan, Matvos and Seru, 2024[45]). Additionally, the same individual could be registered as both a broker-dealer and adviser, meaning that they could be held to different standards in providing personal advice to the same client for different topics or in different contexts.
Similarly, while the US Employee Retirement Income Security Act (ERISA) imposes fiduciary duties on anyone providing advice for a retirement plan in the United States, there are exceptions to this requirement. In particular, one‑off advice is not covered by ERISA, so advice for individuals to roll over their occupational 401(k) plan to a personal individual retirement account (IRA) account would not be subject to fiduciary duty. When the Department of Labor issued its Fiduciary Rule that intended to address this loophole, 19% of surveyed firms limited or eliminated advice for 401k rollovers (Deloitte, 2017[57]).6
In the United States, there is also a difference in the requirements between advice relating to securities, which are regulated at a federal level, and insurance products which are regulated at a state level. The best interest standard relating to the distribution of annuities excludes employer-provided pension plans and does not consider compensation to be a material conflict of interest. Such fragmentation in requirements provides a loophole for financial advisers to provide advisory services for insurance and avoid the more stringent federal requirements relating to securities advice (Honigsberg, Hu and Jackson, Jr., 2021[58]). The situation in Canada is similar, with securities and insurance separately regulated at a provincial level. To promote consistency and co‑ordination across the country for securities, the Canadian Securities Administrators (CSA) was established as a council of provincial and territorial securities regulators in Canada to harmonise and co‑ordinate the regulation of capital markets. Insurance legislation varies more across provinces, but provinces and territories are nevertheless working towards aligning the requirements for insurance more with those for securities, particularly with respect to segregated funds.7
There may also be fragmentation in requirements depending on the client’s profile. In Australia, individuals having a certain level of income or assets can be treated as wholesale clients rather than retail clients, and therefore forgo their right to have advice held to a best interest standard. As such, the Quality of Advice Review recommended that treating an individual client as a wholesale client should require their informed consent and disclosure of the implications (Levy, 2023[42]). Canada took this approach, and high-net worth clients must provide explicit consent to waive their rights to a best interest standard for advice.
More stringent duty of care requirements across the board can, however, result in a lack of access to advice or guidance. While harmonised requirements are beneficial from a consumer protection standpoint, the interpretation of duty of care requirements and requirements to ensure product suitability can be a barrier for firms to provide simplified advice or guidance to their clients for fear of legal liability. In response to increased duty of care standards, over half of US firms either limited or eliminated their advised broker service, moving many of their consumers to self-directed accounts (Deloitte, 2017[57]). In Australia, all advice that considers personal information about the recipient can be considered personal advice and thus is subject to a best interest standard. This led many providers to remove digital tools and calculators that allowed individuals to input their information and receive personalised retirement calculations because providers were worried this would be treated as personal advice. The regulator therefore had to issue limited relief from these obligations for generic retirement income calculators and superannuation projections (Levy, 2023[42]). In response to similar concerns, South Africa amended its existing Code of Conduct to clarify that suitability assessments are flexible and can be scaled according to the specific advice need (FCSA, 2019[59]).
Several jurisdictions are considering how to allow for proportionality considerations for duty of care standards to facilitate these activities and promote access to advice for questions of limited scope. The Delivering Better Financial Outcomes (DBFO) Reforms in Australia have proposed to introduce a new type of adviser that can be employed by superannuation funds and life insurers to give advice on more simple matters while still being held to a best interest standard, and to clarify requirements relating to superannuation funds to provide financial advice for their members and when they can collectively charge for that advice. To facilitate this, they also plan to remove the catch-all safe harbour steps that require providers to take any additional step that would reasonably be considered to be in the client’s best interests, which is a barrier to advice of a limited scope (Mulino, 2026[60]).
The United Kingdom has also been considering how to improve access to advice for specific needs. The regulator provided guidance for firms wishing to provide simplified advice that considers only certain details of an individual’s financial situation, however firms have remained reluctant to serve this market in part due to legal uncertainty. They are now proposing to formalise the guidance with a regulatory framework around simplified advice. It plans to limit the investment amount, scope of products and topics on which such advice could be provided in order to remain proportionate in terms of consumer protections (FCA, HM Treasury, 2023[61]). The EU Retail Investment Strategy intends to enable the provision of simplified advice for standardised financial products. Canada has issued guidance to provide dealers with more flexibility to inform clients that certain transactions could be harmful. The guidance comes in light of the recent trends towards execution-only transactions following general recommendations found on social media or provided by financial influencers. It intends to overcome challenges relating to the Recommendation Prohibition, which presented an obstacle for brokers to provide information intending to influence the client (CIRO, 2026[62]).
4.3.3. Effectiveness of disclosure requirements and implementation challenges
Disclosure requirements have improved cost awareness, leading to lower costs and fees. However, challenges remain to ensure that consumers read and understand the disclosures and to limit advisers’ compliance costs.
There is some evidence that disclosures around fees and the resulting increase in transparency can lead to cost reductions. In Canada, the average management expense ratios of mutual funds and ETFs declined following the implementation of the CRM2 disclosure requirements as a result of a shift to funds with lower fees as well as a reduction in management fee rates. Risk-adjusted investment returns also improved (CSA, 2024[63]). The requirement under MIFID II in Europe to unbundle costs like investment research resulted in a reduction in fees charged to consumers, with more firms taking on those costs themselves rather than passing them on to clients (Morningstar, 2019[64]). The EU Listing Act has subsequently relaxed this requirement to facilitate research and increase its coverage.
However, even where disclosure requirements are in place, financial providers and advisers do not always comply with those requirements or provide effective disclosures. The nature of advice, amount of inducements and fees are not always clearly disclosed under MIFID II. Further, while the Key Information Document is supposed to be provided “in good time”, it is not always provided at the beginning of the advice process, with advisers sometimes waiting until just before the client signs the contract and would be less likely to make use of the document (Uličná et al., 2023[65]).
Disclosure also seems to be less effective in getting consumers themselves to use the information. The Quality of Advice Review in Australia concluded that the required Statement of Advice was ineffective and recommended eliminating it, and that consumers misunderstand general advice warnings to mean that the advice considers their personal situation (Levy, 2023[42]). Furthermore, the requirement for informed consent to renew ongoing fee arrangements was sometimes ineffective at getting superannuation members to realise what they were paying for, and some providers continued to charge fees even if the member was not able to use the service (The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, 2019[66]). In the Netherlands, the Ministry of Finance concluded that the required service provision document (DVD) was not used by consumers and was ineffective at getting them to shop around, so it replaced this document with a comparison map which it hopes will be better understood (Minister van Financiën, 2018[67]).
Additionally, financial providers may use documentation to protect themselves from legal liability, providing too much information and further contributing to the lack of effectiveness of disclosures. In Australia, providers sometimes rely on general advice warnings to avoid having to comply with requirements for personal advice. Providers in Australia and Europe also tend to use disclosures as a compliance exercise, including too much information and offsetting any benefits of having a short and simple document for consumers to read (Levy, 2023[42]; Uličná et al., 2023[65]).
Disclosure requirements increase compliance costs for providers and advisers, which can impact access to financial advice. As a result, some countries are trying to reduce compliance costs relating to disclosure. In Australia, the Delivering Better Financial Outcomes Package removed requirements to provide a fee disclosure statement and provides more flexibility for providers with respect to the timing of providing consent documents for ongoing fee arrangements. It also allows providers to post the required Financial Service Guide that provides information on the services offered on their website rather than issue the document directly to each consumer. In the Netherlands, providers can automatically generate the required comparison map through an online portal.
4.3.4. Effectiveness of restrictions on remuneration and implementation challenges
Remuneration restrictions aim to complement duty of care and disclosure requirements by obliging advisers to mitigate or eliminate conflicts of interest relating to their compensation, thereby reducing the potential for biased advice and opaque costs. Nevertheless, challenges remain to ensure a level playing field among different types of advisers and access for consumers with lower levels of assets.
Hard limits or bans on certain remuneration structures have led to increased flows to lower cost and less complex products. In the Netherlands, the commission ban seems to have been effective at reducing recommendations for certain harmful products (Minister van Financiën, 2018[67]). Following commission bans, Australia, the Netherlands and the United Kingdom have all observed a more rapid decrease in fees than elsewhere (Morningstar, 2019[64]).The Netherlands and the United Kingdom now have some of the least expensive investment funds in Europe, and have observed increased flows to lower cost products, including passively managed funds (Better Finance, 2022[68]; BEUC, 2019[69]; Oxera, 2023[70]; Morningstar, 2019[64]). In Canada, where deferred sales charges were banned, investors also shifted to lower cost funds (Cutts, 2023[71]). In Israel, a reduction in the commission cap for mutual funds appeared to be fully passed on to investors through lower expense ratios and resulted in increased net fund flows (Sokolinski, 2022[72]).
Requirements to explicitly consider potential conflicts of interest coming from remuneration structures, as with MIFID II and IDD in Europe, have also resulted in lower embedded fees for some products and a move towards more transparent direct distribution fees. In Belgium, some product providers have reduced management fees paid to distributors that provide independent advice to the benefit of their clients (Uličná et al., 2023[65]). In Germany, products without embedded distribution fees are becoming more common for independent advisers, allowing distributors to charge directly for the advice provided (Uličná et al., 2023[65]). In Norway, 70% of firms have shifted from inducements to charging direct fees to their consumers (Uličná et al., 2023[65]). Commissions on structured products in Sweden have also come down significantly, though this decrease has come with higher direct fees charged to the consumer (Finansinpektione, 2021[73]). The shift towards charging direct distribution fees rather than embedded fees seems to be beneficial overall, as products having direct distribution fees tend to be less expensive than those with indirect fees (Uličná et al., 2023[65]).
Even if they have maintained the payment of inducements, some providers have introduced innovative remuneration structures as a result of rules requiring distributors to account for potential conflicts in the remuneration they receive. In France, there are examples where providers link it to product suitability, and in Spain to the quality of service based on internal indicators. In Austria and Finland, there are examples where inducements are collected at the firm level and then distributed to advisers in a way to make advisers more product-neutral (Uličná et al., 2023[65]).
A requirement to manage conflicts of interest alongside limitations on remuneration is important, as where this is not the case intermediaries may turn to alternative remuneration structures that may not lead to optimal outcomes for the consumers. In Finland, for example, insurance brokers introduced a success fee following the ban on commissions where they agreed to reduce a client’s premiums if they chose their product over one offered by another broker (Mäkynen, 2015[74]).
However, advisers do not always effectively identify and mitigate the conflicts they face. EIOPA found that many firms failed to appropriately address conflicts of interest that could cause potential harm for the detrimental impact test under the EU’s Insurance Distribution Directive (IDD). This was due to a lack of awareness of conflicts of interest or because the assessments of detrimental impact were too standardised or ignored qualitative criteria (EIOPA, 2023[75]).
Limits on remuneration structures have not always led to reduced costs even when they resulted in a shift in compensation structures. In Australia, many advisers shifted from taking commissions to charging upfront and ongoing advice fees to their clients, but consumers often did not receive any benefit from the ongoing charges resulting in significant remediation programmes to address consumer harm. In Germany, evidence in the health insurance market indicates that the commission clawback provision helped to reduce churning, but the cap on commissions was less effective in reducing acquisition costs for consumers (Braegelmann and Schiller, 2023[76]). In addition, upfront commissions increased while deferred commissions decreased, reversing the decrease observed immediately following the introduction of the cap (BaFin, 2020[77]). Despite the expectation that inducements be exceptional under MIFID II, 40% of investment funds in one sample included embedded inducements, and the level of those inducements has not necessarily declined (Uličná et al., 2023[65]).
The fragmentation of requirements across distribution channels can also impede the effectiveness of limits on remuneration to improve advice. Following the commission ban for insurance brokers in Finland, some brokers changed their status to agents while others established offices in other EU countries in order to continue operating with commissions, even when serving the Finnish market (Mäkynen, 2015[74]). However, Sweden did not observe a shift in distribution channels following the commission ban for insurance products. It observed no change in the proportion of commissions received for distributing insurance products among companies licensed to provide both investment advice and insurance distribution (Finansinpektione, 2021[73]).
A major challenge regarding limits on remuneration models, and in particular restrictions on commissions, is the potential reduction in access to advice. In the Netherlands, there has been an increase in execution-only transactions with no advice provided. This seems to be in part due to a reluctance of advisers to provide additional information to consumers inquiring about a particular product out of uncertainty whether doing so would imply that they would be providing advice. This is reinforced by consumers’ tendency to not shop around for fear of paying a fee for advice. This has also led to a reduction in ongoing services relating to the product, with providers not even offering such services to their clients (Minister van Financiën, 2018[67]; Oxera, 2023[70]).
The shift to fee‑based advice has made it more difficult in particular for individuals with smaller accounts to access advice (Uličná et al., 2023[65]). In the Netherlands, independent advisers were only willing to provide advice for minimum investment amounts of EUR 250 000 to 500 000, and for lower amounts they proposed discretionary portfolio management. Banks and insurers referred the clients with under EUR 100 000 to their websites to invest execution-only (European Commission, 2018[78]). Access problems are also evident in the United Kingdom, though to a lesser extent. Banks accepted clients with GBP 100 000 to invest and referred those with lower amounts to an independent adviser who was often willing to provide advice (European Commission, 2018[78]). However, the proportion of advisers requiring at least GBP 100 000 to invest increased from 13% to 32% from 2013 to 2015 (Oxera, 2023[70]).
The rules around how people can pay for advice may help or hinder access to advice. Rules are stricter in the Netherlands than in the United Kingdom, and advisers cannot recoup their fees via the premium paid for the product. They also do not commonly offer consumers to pay for advice in instalments, which could reduce the upfront cost of advice for the consumer (Minister van Financiën, 2018[67]; Oxera, 2023[70]). This has, in part, led to a reduction in the uptake of life insurance products that are not associated with taking out a mortgage, such as long-term investment products. The United Kingdom also allows people to withdraw up to GBP 500 from their retirement savings accounts without a tax charge to pay for financial advice for retirement. As part of tranche one of the Delivering Better Financial Outcomes reforms, Australia has enacted measures to clarify the legal basis allowing consumers to pay for advice from their superannuation account. Members of superannuation funds can use their retirement savings to pay for financial advice from a third party as it relates to retirement. As part of tranche two of the reforms, the government also intends to provide certainty to superannuation trustees on the financial advice topics they can charge member accounts collectively, including topics relating to retirement, and the circumstances that can be considered as part of providing this advice.
Given the challenges relating to access with a fee‑based model, however, full commission bans may not be ideal in certain contexts. South Africa reconsidered the recommendation of its Retail Distribution Review to move away from commissions following concerns that the resulting cost of advice would threaten the viability of the provision of advice or access to certain products, particularly for low-income groups. As such, they are instead requiring that providers justify the fees or commissions charged to ensure they are not disproportionate to the product and service provided, particularly for products serving less sophisticated or low-income consumers such as funeral products.
Restrictions on commission payments can also present a challenge to achieve a level playing field for different types of advisers and channels. Independent advisers may be at a disadvantage compared to tied advisers operating in a vertically integrated business that can draw revenues from other products and sources. In many jurisdictions, the market for independent financial advice remains very small. The main reasons for a lack of independent advice seems to be a reluctance for consumers to pay upfront for advice, the tendency for independent advisers to require a minimum investment threshold for advice, and difficulty to penetrate a market crowded with other types of advisers (Uličná et al., 2023[65]). Indeed, Swedish authorities noted that independent advice is not common because it is hard for them to compete, even as business models are becoming more fee‑based rather than commission-based (Finansinpektione, 2021[73]). While the overall market for independent advice in the Netherlands remains small, the independent advice market is more established there than elsewhere in Europe. Independent advisers serve around half of the market for certain complex products for which advice is required (Oxera, 2023[70]). The fact that commissions are banned for all channels helps from a demand perspective because consumers will have to pay upfront regardless of the type of adviser used. When introducing the commission ban, the Dutch authorities also equalised the tax regimes for independent and tied advisers to promote a level playing field.
An additional measure to promote a level playing field between independent advisers and vertically integrated firms in the absence of commissions is a requirement for advisers to justify the fee charged to clients for advice. Both the Netherlands and the United Kingdom have implemented this measure. It aims to limit the potential for vertically integrated firms to cross-subsidise their advice and offer it at a lower cost than independent advisers would be able to. Advisers must perform a value‑for-money assessment to demonstrate that the charge is representative of the actual cost incurred for advice and distribution.
Policymakers need to understand the reasons why individuals do not seek financial advice in order to gauge to what extent measures taken to improve the quality of financial advice are likely to impact demand and what could be done to reduce these barriers. The regulatory framework and measures discussed in the previous section to improve the quality of advice can impact the structural barriers to seek financial advice, both real and perceived. The regulatory framework is less likely to impact other consumer barriers, which would require additional policy interventions to address.
4.4.1. Real and perceived structural barriers
The regulatory framework can create real and perceived structural barriers to seeking financial advice. These structural barriers mainly relate to the cost of advice and the trust that consumer have in advisers.
Many of the measures to promote the quality and transparency of advice can increase the cost of providing it, leading to reduced demand. The cost of advice is a main focus of consumers considering whether to engage a financial adviser, and a key barrier for them to do so. Consumers often focus on cost when choosing an adviser, and many view advice as too expensive or choose to not take advice because of the fees involved (FCA, 2025[79]; ASIC, 2019[80]; Fidelity, 2024[81]; Chikova, Freddi and Pethe, 2025[82]; Schmeiser and Hogarth, 2013[4]; Adfiz, 2025[25]).
Disclosure requirements and the shift towards more transparent fee structures are likely to increase the visibility of costs. Many consumers currently have a poor understanding of what financial advice actually costs, even those receiving advice (FCA, 2025[79]; Aegon, NextWealth & Richard Parkin Consulting, 2023[28]). Improved understanding of the cost may therefore negatively impact demand even if actual costs do not increase.
However, perceived value is likely to be more important than cost in the decision to engage an adviser (Centerdata, 2023[83]). While a proportion of advised individuals may agree that financial advice is expensive, many also feel that advice is worth the cost. Numerous surveys indicate that advised clients often feel the advice they get is good value (FCA, 2025[79]; Aegon, NextWealth & Richard Parkin Consulting, 2023[28]; BNY Investments, 2024[27]; Centerdata, 2023[83]).
A failure of the regulatory framework to ensure competent advisers and quality financial advice can undermine trust, another significant barrier to seeking financial advice. A lack of adequate qualifications, duty of care standards and transparency would exacerbate this barrier. Many consumers indicate that they do not take advice because they lack confidence in advisers and do not trust them to act in their best interest (FCA, 2025[79]; ASIC, 2019[80]; Financial Consumer Agency of Canada, 2025[84]; age UK & Aviva, 2025[85]) While those receiving financial advice tend to have more positive opinions of financial advisers, trust of advisers remains an issue even for consumers receiving financial advice (Schmeiser and Hogarth, 2013[4]; ASIC, 2019[80]; Burke and Hung, 2019[86]; FCA, 2025[79]; Adfiz, 2025[25]).
4.4.2. Consumer barriers
Consumer barriers related to the perceived willingness or need to seek financial advice are less impacted by the regulatory framework and will remain an obstacle to the demand for advice regardless of the measures taken to improve its quality. These barriers include a lack of awareness or engagement with one’s finances, a lack of perceived value of advice, and financial anxiety.
A lack of awareness or engagement with the management of one’s finances can be a barrier for consumers to seek financial advice. Many consumers fail to consider financial advice as an option because they simply are not thinking about their finances (Invesco, 2024[3]; FMA & Colmar Brunton, 2016[87]; FCA, 2025[79]; ASIC, 2019[80]). Others may not be actively engaged with their retirement planning enough to seek financial advice, particularly those who have been defaulted into an investment or drawdown strategy (FCA, 2025[79]; Reuter and Richardson, 2022[88]; age UK & Aviva, 2025[85]). A lack of engagement with financial planning and tendency to procrastinate financial decisions may also prevent individuals from making the effort to find a financial adviser (FCA, 2025[79]; age UK & Aviva, 2025[85]).
A significant proportion of the population does not seek financial advice because they feel capable of making decisions on their own and do not see the added value of a financial adviser (FCA, 2025[79]; ASIC, 2019[80]; Chikova, Freddi and Pethe, 2025[82]) Paradoxically, the overconfidence in one’s own financial abilities is significantly and negatively related to actual financial knowledge, competence, and pension literacy, which may contribute to low advice take‑up by those with lower financial literacy (Gentile, Linciano and Soccorso, 2016[89]; Gallery, Gallery and Irving, 2011[90]; Seay, Kim and Heckman, 2023[91]; Dick and Harvey, 2025[92]). Overconfidence is also an explanation as to why men tend to be less likely to seek financial advice (Clark, Fiaschetti and Gerrans, 2018[93]; Zhang, 2014[13]; Montmarquette and Prud’Homme, 2020[20]). Men tend to demonstrate higher levels of overconfidence, leading them to rely more on their own judgement for investment decisions (Gentile, Linciano and Soccorso, 2016[89]).
Others not taking professional advice believe that they are able to access sufficient information to inform their financial decisions elsewhere, either from free information and guidance or non-regulated sources of advice. These sources include official websites, the financial provider, family and friends, employers, official news sources, television, and social media (FCA, 2025[79]; iPipeline & Standard Life, 2025[11]; Reyers, 2019[94]; Financial Consumer Agency of Canada, 2025[84]; ASIC, 2019[80]; Gentile, Linciano and Soccorso, 2016[89]).
Another reason why consumers may not seek financial advice is that they do not see the value of advice for their particular financial situation. This is especially true among consumers with lower levels of investable assets or household income (ASIC, 2019[80]; FCA, 2025[79]). Older individuals who are likely to see advice for retirement as more valuable are also more likely to seek it, with age and income important predictors of the likelihood of receiving financial advice (ASIC, 2019[80]; Financial Consumer Agency of Canada, 2025[84]; Harlow, Brown and Jenks, 2019[2]; Montmarquette and Prud’Homme, 2020[20]; Clark, Fiaschetti and Gerrans, 2018[93]; FCA, 2025[79]).
Finally, anxiety about discussing finances and the worry of seeming financially unprepared, uneducated or incapable may also make consumers reluctant to seek financial advice. They may feel discomfort with sharing personal financial information or fear looking stupid (Centerdata, 2023[83]; ASIC, 2019[80]). Consumers with lower levels of education or income or higher levels of financial stress may be more likely to have higher levels of anxiety (Van Dalen, Henkens and Hershey, 2016[95]; Liu, 2023[96]) Indeed, financial anxiety may be one explanation why those with lower financial literacy are less likely to seek financial advice, and that advice appears to serve more as a complement to financial knowledge rather than a replacement. Generally, individuals with lower levels of education or financial literacy tend to be less likely to use financial advice, even if they would be the most likely to benefit from it (Harlow, Brown and Jenks, 2019[2]; Calcagno and Monticone, 2015[97]; Montmarquette and Prud’Homme, 2020[20]).
Policymakers should strive to minimise negative impacts on the accessibility of advice. However, barriers to seeking advice will always exist, and not all individuals will be able to benefit from receiving advice. As such, many jurisdictions have taken additional measures to promote good outcomes for those not taking personalised financial advice. Some have developed frameworks or services to provide guidance to individuals who would nevertheless want help with retirement planning, and others have taken measures to avoid harm from financial products for all consumers.
4.5.1. Measures to provide guidance or assistance for those who want support
Many jurisdictions are making efforts to ensure that individuals not taking advice can still access assistance to help them make suitable financial decisions for their retirement. These include personalised guidance and other sources of more general guidance and information.
Personalised guidance is one approach to nudge consumers towards choosing financial products that are likely to be suitable. Providers of occupational pensions in the Netherlands are now required to provide guidance to their members about their options at payout and inform them of the implications of the different options given their personal circumstances. The United Kingdom has introduced a framework for targeted support that allows firms to recommend specific products to consumers so long as they identify the target market for those products in advance and provide the same product advice to everyone matching that profile. Firms should make the recommendations on the belief that consumers are likely to be better off if taking the recommendation. The intention is that firms will have more liberty to provide somewhat tailored assistance to their consumers without being subject to the more resource‑intensive compliance requirements for providing regulated financial advice. The FCA will work closely with the Ombudsman to provide comfort to both providers and consumers that the Ombudsman will be able to handle complaints fairly and in line with the expectations of the targeted support framework. With a similar objective, Australia is proposing to introduce Targeted Superannuation Prompts that superannuation funds can send to defined target groups to encourage them to engage with their retirement savings.
Governments have also taken steps to ensure more general guidance and the availability of information that people need to make informed financial decisions, in particular for their retirement. Such services often complement individual pension dashboards that show individuals how much retirement income they can expect to have in retirement (OECD, 2024[98]). Australia has launched a range of free and independent tools and resources on its Moneysmart website to help people plan for their retirement (ASIC, 2026[99]). It also offers a Financial Information Service whose officers provide information and tools relevant to an individual’s situation to help them to make financial decisions. The PensionWise service in the United Kingdom offers free and impartial guidance to individuals regarding their defined contribution pension by helping them to understand the options available and their implications. Individuals can engage in a self-guided session via a web tool or make an appointment for a consultation with an officer over the phone. However, it has been a challenge to mainstream the usage of this service, with only a small proportion of individuals using it (FCA, 2025[79]).
Other semi-public organisations often provide financial guidance. In France, L’Union Retraite, an association of the complementary pension funds, provides a free personalised interview to help individuals understand their pension rights, expected future benefits, and options available to them to improve their situation. Money Wise in the Netherlands is an initiative of the Ministry of Finance that partners with the private sector to maintain a website where individuals can access information on a variety of topics, including how the pension system works, what individuals can expect from their retirement and some of the options available to them (European Commission, 2016[41]).
Nevertheless, such services are likely to be effective only if the individual is actively seeking assistance. Evidence indicates that the mere availability of guidance or recommendations does not necessarily get people to follow the suggestions made. A German brokerage firm making free, independent advice available to its retail clients found that those who most needed help were the least likely to use the service, and those who received the advice did not use it to improve their portfolio (Bhattacharya et al., 2011[100]). Similarly, providing recommendations automatically does not necessarily improve outcomes. In another study, US investors who chose to receive a recommendation did better than those who received it by default (Hung and Yoong, 2010[101]). Another German study showed that the majority of households receiving a standardised recommendation ignored it, and those who did listen did not follow the recommendation to its full extent (Stolper, 2018[102]).
4.5.2. Measures to avoid harm for individuals not taking advice
Other measures can prevent harm for those not willing or able to seek assistance for their retirement planning. Regulatory measures are increasingly holding product providers themselves responsible for ensuring that their products are not likely to cause harm to consumers. Such measures include requirements for product providers to identify the target market for their products or more general requirements to ensure that products are providing good value to consumers, restricting under what conditions consumers can access certain financial products, and the clarification of responsibilities of those promoting products outside traditional channels.
One approach to promote the design of products beneficial to individuals has been to require the product manufacturers themselves to consider the target market that their product would be most suited to. MIFID II in Europe requires providers to define the target market for products and to monitor that the product is distributed to that market. Distributors must take this information into account and should also identify markets for which the product is unlikely to be suitable. Similarly, the product governance and oversight requirements of the Insurance and Distribution Directive require insurers to identify the target market for their products during the product approval process and take reasonable steps to ensure the product is distributed to that market. In Germany, BaFin considers the lapse rates of long-term life insurance products as an indicator of suitability. Insurers are expected to ensure that their products offer value to customers not lapsing early, and if they have to raise reasonable lapse assumptions, this is an indication that the product is not suitable for the target market (BaFin, 2024[103]). The Design and Distribution Obligations in Australia also require issuers to define a target market for their products, and distributors must take reasonable steps to distribute the product in a way consistent with the target market. Insurance companies in France must define a target market and the associated distribution strategy, which should consider factors such as age, household, profession, pension sources, risk appetite, financial circumstances, objectives and investment horizon. The supervisor’s expectation is that the more complex the product is, the more granular the target market should be (ACPR, 2024[104]). In Canada, the Canadian Council of Insurance Regulators (CCIR) has proposed targeted guidance for segregated funds that indicates that providers should consider the target market for these products (CCIR/CISRO, 2025[105]).
Other measures require product providers to take steps to ensure that their products and services more generally are providing good value to consumers. South Africa has a Treating Customers Fairly approach for regulation and supervision that lays out expectations for financial institutions to ensure fair outcomes for consumers throughout the product lifecycle, from design to distribution through to servicing and complaints. Similarly, the United Kingdom introduced the Consumer Duty in 2022, which prescribes a set of principles that go beyond a duty of care standard and requires firms to have procedures and policies in place to ensure good outcomes for retail consumers. Firms need to ensure that their products and services meet the needs of consumers, that they provide good value, that they provide information in a way that consumers can understand, and that they provide adequate customer support to help consumers effectively use the products.
Other measures can limit access to products without advice to avoid potential harm. Under MIFID II, consumers can only access non-complex products without advice or suitability checks, and under IDD consumers must consent if accessing certain insurance‑based investment products without advice. The Netherlands also requires a knowledge test for consumers who would like to invest in certain products without advice.
A few jurisdictions limit the sale of financial products in certain contexts to limit the potential for misselling. The hawking of financial products is prohibited in Australia meaning that products cannot be sold a consumer following unsolicited contact. In Germany and the United Kingdom, intermediaries cannot sell payment protection insurance within seven days of a credit sale. In the United Kingdom, this restriction followed a mis-selling scandal for the product as the authorities found that consumers were being pressured into purchasing it, which was very profitable for providers and not providing value for consumers (Oxera, 2023[70]).
The use of social media to provide general financial advice and promote financial products is a growing concern in many jurisdictions, as such channels are not always well-covered by existing regulations. Ireland has addressed this directly in its Guidance on the Consumer Protection Code, stating explicitly that “finfluencers” are subject to the requirements of the Code if they benefit from the promotion of certain financial products on social media. The firm whose services or products are promoted is held responsible for ensuring that the social media posts comply with the Code (Central Bank of Ireland, 2025[106]). The FCA in the United Kingdom also issued guidance relating to financial promotions on social media (FCA, 2024[107]). Firms remain responsible for any communication relating to their products, and certain high-risk products are not allowed to be promoted to retail consumers, including via social media. Finfluencers must comply with restrictions around financial promotions regardless of their financial relationship with the firm supplying the products. Communications on social media can also be subject to the Consumer Duty requirements to deliver good outcomes for consumers and support their understanding. To help provide clarity on the obligations applicable to influencers communicating about financial products, the FCA developed a useful infographic with the Advertising Standards Authority (FCA, 2023[108]).
Regulators should take measures to improve the quality of advice while being mindful of the potential negative impacts on access to advice. All consumers have the right to know how much they are paying for advice and to trust that the advice they receive is in their best interests. Nevertheless, the design and implementation of such measures need to find a balance between ensuring the quality of advice and promoting affordable access to advice, as these two objectives can conflict with one another.
Each measure discussed in this chapter has demonstrated some effectiveness at improving outcomes for those taking financial advice. Registration and qualification requirements have transformed financial advice into a profession rather than a sales role, increasing the competence of advisers and contributing to improved trust in financial services. Duty of care standards have improved the quality of financial advice, leading to recommendations for lower cost products, and have raised the bar in terms of assessing the suitability of products for consumers. Disclosure requirements have raised awareness of the costs involved in financial products, at times leading not only to recommendations for lower cost products but also a reduction in charges passed along to individuals. Restrictions on remuneration structures target the most prevalent and potentially harmful conflicts of interest at their source, improving the effectiveness of duty of care requirements to identify and manage conflicts.
However, each of these measures presents challenges to ensure their effective implementation while minimising negative impacts on access to advice. Stricter qualification requirements can lead to a reduction in the number of advisers, as those unwilling or unable to meet the requirements exit the market. Intermediaries are not always effective at identifying and mitigating potentially harmful conflicts of interest, even if duty of care standards require them to do so. Requirements to ensure the suitability of products and make recommendations in the best interest of consumers can lead to a fear of legal liability, reducing the willingness of intermediaries to serve certain markets. Consumers often ignore disclosures, which are commonly used to mitigate the liability risk of providers rather than provide useful and understandable information to clients. Limits on the ability of intermediaries to receive commission payments and the increase of fee‑based advice can lead to reduced access to advice for those with lower amounts to invest and result in an increase in execution-only investment.
Regulators should therefore focus on how they can minimise any negative impacts and promote good outcomes for all consumers regardless of the channel through which they access a financial product, even if they do not receive financial advice.
4.6.1. Careful design and implementation of measures to improve adviser competence and the quality of advice is necessary to ensure their effectiveness
Careful design and implementation can improve the effectiveness of measures taken to improve the quality of advice. Qualification and licensing requirements, duty of care standards, disclosure requirements and remuneration restrictions have all had a positive impact on outcomes for those taking financial advice. However, each also presents challenges to ensure their effectiveness.
Qualification requirements have improved the level of competence of financial advisers. However, the allowed credentials and titles should be limited to avoid consumer confusion. Credentials approved by the supervisor can ensure that a minimum standard is met. Restricting the titles that financial advisers may use to describe their activities can avoid misleading consumer expectations regarding the services provided. Registration databases aid in ensuring quality by providing consumers with a resource to verify the adviser’s legitimacy and conduct.
Regulators could harmonise requirements relating to the level of care that advisers must provide to their clients in considering their best interests. A lack of harmonisation of requirements across distribution channels and markets can lead advisers to avoid serving certain markets or products, or lead consumers to receive lower quality advice in certain contexts. Nevertheless, allowing for some variation in the suitability assessment depending on the context can allow for providing simplified advice for specific issues.
Principle‑based approaches aiming to ensure that adequate processes and procedures are in place to determine suitability may help to achieve better outcomes. Checklist-type approaches using inflexible criteria are less able to adapt to changing contexts or focus on the actual needs of the client, leading to ineffective suitability assessments focussed on compliance with rules rather than consumer outcomes.
Disclosures should contain only the most important information for consumers and be presented in a simple and comprehensible way to improve their effectiveness. Relevant additional information should nevertheless still be publicly available, for example on the provider’s website.
Any remuneration limits, where appropriate, should consider the specific problems observed in a given market, as the effectiveness of such limits also depends on local context as well as design. Full commission bans have tended to be for markets that have experienced severe mis-selling scandals and that already have an established independent adviser profession. Even when commissions are not fully banned, specific remuneration structures representing unmanageable conflicts of interest, such as those linked to sales targets, are commonly prohibited and advisers are generally required to mitigate conflicts relating to their compensation. Innovative remuneration structures, such as those linking compensation to the quality of advice or the distribution of commissions at a firm level to avoid product bias at the adviser level, can help to minimise potential conflicts of interest.
Additional measures may also be needed to avoid unfair competitive advantages for certain players when bans on commissions are imposed. Independent advisers who cannot charge commissions may be at a disadvantage compared to commission-based advisers because the upfront cost of the advice is higher. Even when commission bans apply across the market, vertically integrated firms may have a competitive advantage compared to independent advisers because they are able to cross-subsidise their activities across lines of business. To avoid this, advisers can be required to justify the fees charged and demonstrate that they are sufficient to cover the services provided. Intermediaries may also need to ensure that consumers are aware of the services they are entitled to based on the fees charged, such as ongoing advice.
4.6.2. Implementation should also consider how to minimise any impact on access and affordability
Measures to improve the quality of advice can also have a negative impact on access to advice. Advisers not willing or able to meet additional requirements may fail to serve certain markets, and higher compliance costs can be passed on to consumers, increasing the cost of advice. Making the costs of advice more transparent can also negatively impact demand, as consumers may be less willing to pay upfront for advice.
Qualification requirements should be proportional to the context and problem for which advice is given. A reduction in the number of advisers following increased qualification requirements is not necessarily negative to the extent that those who are less competent exit the market. However, requirements can also recognise professional experience in addition to formal education to avoid forcing experienced advisers out of the market. Lighter requirements may also be justified for specific, simple situations.
The definition of advice needs to be clearly defined to provide comfort to intermediaries that they are complying with rules. Duty of care standards can negatively impact the advice gap due to a fear of legal liability, which can result in a reluctance for intermediaries to either serve certain markets or to provide helpful information to their clients that could potentially be interpreted as advice. Regulatory boundaries for advice should distinguish between information and advice, making explicit that providing useful information to consumers – such as online tools or personalised information on expected retirement incomes – will not be a breach of conduct.
The advice boundary needs to be clear to allow for simplified advice for financial issues of limited scope. Potential ways to delineate the boundary can relate to the recommended product (e.g. a simple product below a certain amount invested) or advice or guidance relating to a specific context (e.g. questions around retirement savings or the payout options available at retirement). The enforcement of suitability requirements should nevertheless recognise that simplified advice would not necessarily be the best advice if considering an individual’s overall financial situation but should be reasonably suitable given the personal information provided.
Disclosure requirements should strive to minimise compliance costs. Those that have proven to be ineffective should be adapted or removed. Regulators and supervisors can also take measures to facilitate the preparation of required disclosures.
More flexibility in the way consumers can pay for advice can mitigate any reduction in demand resulting from making the cost of advice more transparent. This can be done, for example, by including the cost in the insurance premium or allowing consumers to pay for retirement advice from their retirement savings account.
Certain products may warrant an exception from restrictions on remuneration structures, when implemented. Commission bans may not be necessary for products having a lower potential for harm, such as those in very competitive markets or that are easily understood by consumers. Exceptions can also be made for products targeted at underserved or vulnerable markets, such as some insurance products. For the latter, a more common approach is to have targeted limits on the allowed commissions for those products to avoid a reduction in market penetration.
4.6.3. Regulators should carefully weigh trade‑offs and consider whether a potential reduction in quality to promote access is justified
Measures to avoid an impact on access or to reduce the cost of providing advice need to be carefully assessed to ensure the expected benefits outweigh the potential reduction in advice quality, particularly given that value is often more important than cost for consumers. While some measures to improve advice quality may have a negative impact on the accessibility of advice, addressing conflicts of interest, transparency and adviser competence is necessary to ensure that the advice is ultimately beneficial to consumers. Such measures can also improve trust, which is a key factor for individuals not only to seek advice but to follow it. Furthermore, there are many reasons as to why individuals do not seek financial advice, therefore increasing access is not guaranteed to increase uptake.
Solutions focussed on reducing the barriers to provide and access simplified advice for specific issues should be carefully considered given the more limited benefits of such advice for retirement. The benefits of one‑off advice and non-comprehensive advice for retirement seem to be more limited, as many benefits from advice are realised when having a longer-term relationship with the adviser or for more complex issues. The length of an individual’s relationship with an adviser matters for increasing savings and riding out market turmoil, as advisers can help individuals stick to their long-term financial plan and a longer relationship with an adviser helps to build trust. At retirement, the added value of advisers is not just encouraging lifetime income, but also helping individuals to adopt a payout strategy that considers their total wealth, is tax efficient, and can respond to market dynamics and changing needs over retirement.
All consumers do not necessarily benefit equally from financial advice, and increasing their access to advice will not necessarily improve outcomes. Advice is less effective at improving risk-taking for individuals with lower levels of financial literacy. Women more often receive poor advice due to conflicts of interest or adviser bias than men.
Alternatives to advice may be more effective at achieving similar benefits where access to or demand for advice may be limited, or for groups who tend to benefit less. Well-selected default investment strategies for retirement savings can be broadly effective to achieve higher net returns, encourage appropriate levels of risk-taking, and avoid panic-selling. Personalised guidance could be an alternative to simplified advice for questions of limited scope. Such a service could also be valuable for those with lower levels of assets who may not be able to access financial advice, or for those with lower financial literacy who are less likely to seek advice but more likely to benefit from some assistance.
4.6.4. Other policy interventions could help to reduce barriers to access financial advice
Other measures not specifically focussed on financial advice could contribute to improving the uptake of advice. For example, improvements in financial literacy, and more specifically pension literacy, could increase demand for financial advice for retirement. Individuals with low financial knowledge are less likely to consult a financial adviser. Furthermore, those with low pension knowledge are also more likely to be overconfident in their own abilities to invest for retirement, and overconfidence is one of the main reasons that individuals believe they do not need advice.
More generally, communication or awareness campaigns could help to overcome individuals’ lack of awareness or engagement with their retirement planning. The reluctance to think about one’s finances and procrastinate financial decision making is another reason why individuals do not seek financial advice or guidance, even if they think it could be useful. Reminding the public of the importance of planning for retirement and doing so earlier rather than later may help to spur some people into being more proactive and seeking help if they need it.
4.6.5. Measures should be in place to support and protect those not taking advice
While certain actions can be taken to reduce the negative impact of regulation on the advice gap, not everyone will receive financial advice, and complementary measures are needed to reduce the risk that financial consumers not taking advice will be harmed from an inappropriate investment. Requirements around the distribution of products can help to minimise the potential for harm even for those not considering advice. Information and guidance services can provide help for consumers who would still like some assistance but may not be willing or able to access advice.
Putting more onus on the product manufacturers to ensure that their products will benefit their target market can mitigate the potential for harm to consumers. Such requirements oblige product providers to clearly define the target market for each product and take actions to ensure that the product is distributed primarily to that market. Holding firms accountable for the distribution of their products also provides an additional layer of protection against the dissemination of inappropriate advice by “finfluencers”. Other measures go even further, focussing on consumer outcomes and requiring as a matter of principle that firms take steps to ensure their products and services provide good value and treat consumers fairly at every point of the distribution cycle.
Governments need to ensure that information about retirement planning and options is easily available and accurate, as some individuals prefer to obtain information and advice from sources other than a financial adviser. Furthermore, as society and especially young people rely more on social media for financial information, regulators need to ensure that there are no regulatory gaps and that the distributors of such information are aware of their legal obligations to consumers.
Regulators should consider how to facilitate providers and intermediaries in assisting consumers to make better decisions and provide personalised guidance without running afoul of regulatory requirements relating to financial advice. Such options could allow providers or intermediaries to highlight actions that are likely to be appropriate – or risky – given the known information about the individual. For example, they may allow providers to suggest a certain product that is likely to be appropriate given the individual’s characteristics, to provide a prompt to individuals who are likely to be better off by taking a certain action, or to provide a warning when a certain decision may not be the best course of action.
However, efforts to address the advice gap at the advice boundary need to also address the liability concerns of providers and intermediaries for them to engage with this type of solution. Having general requirements to treat customers fairly can provide the regulators with some comfort that a provider will not provide a suggestion that is inappropriate for the consumer. However, providers also need to have some certainty that they will not face sanctions if the suggested course of action was not the best solution for the consumer when reasonable expectations would indicate otherwise. For such solutions to be practicable, regulators will need to set clear expectations and make sure the rules and requirements in place are aligned with that expectation. Regular engagement with stakeholders to ensure a common understanding of regulatory expectations can be helpful in this regard.
A key challenge, however, is getting people to use the advice, tools and information available to them. Indeed, while solutions such as pension dashboards and guidance services are a valuable resource to help with retirement planning, only a portion of the population accesses them. Furthermore, simply providing advice does not mean that people will follow it, and individuals need to voluntarily want the advice to benefit from it. Bridging the engagement gap will therefore be just as challenging as addressing the advice gap.
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← 1. The topic of financial advice is relevant to the OECD’s work on financial markets. The Recommendation for the Good Design of Defined Contribution Pension Plans [OECD/LEGAL/0467] states that financial advice should be accessible, accurate and unbiased. Principle 9 of the OECD/G20 High-Level Principles on Financial Consumer Protection (OECD, 2022[109]) addresses Responsible Business Conduct and Culture of Financial Services Providers and stresses the importance of suitable and objective advice that is in the best interest of consumers, as well as the appropriate management of conflicts of interest.
← 2. The regulation and supervision of financial advice is complex because it traverses many fields and often involves multiple oversight authorities and sets of rules. Although the focus of this chapter is financial advice for retirement, it is important to understand how advice for retirement fits within the regulatory framework for financial advice more broadly to better understand any potential gaps in regulation and to learn from the approaches taken for other financial products. Additionally, advice for retirement can relate to both investments and insurance products, which are often regulated separately, so it is necessary to look at both distribution channels.
← 3. This chapter has benefited from conversations with experts in both the public and private sectors, whose knowledge and views are also incorporated.
← 4. This restriction excludes state‑registered broker-dealers who may continue to use the title adviser.
← 5. Safe harbour rules required advisers to 1) identify the client’s objectives, financial situation and needs; 2) identify the subject on which they will provide advice; 3) identify the client information relevant to the advice; 4) take reasonable steps to obtain any missing information; 5) assess whether the adviser has the expertise necessary to provide the advice, otherwise decline to do so; 6) assess the products that could meet the client’s needs; 7) base judgement and the final recommendation on all relevant circumstances; and 8) take any other steps that could be considered to be in the client’s best interest given the circumstances.
← 6. The rule was ultimately blocked by the courts.
← 7. Segregated funds are equivalent to the variable annuities sold in the United States, where they are regulated as securities.