As the investment services industry braces for a wave of regulatory transformation, a new perspective is emerging—one that views compliance not as a cost centre, but as a catalyst for growth.
everyoneINVESTED, a WealthTech helping to boost financial inclusion, recently explained the opportunities from regulatory change.
European and UK regulations, including Europe’s Retail Investment Strategy, the UK’s Advice Guidance Boundary Review, and the FCA’s recent consultation on a reformed Product Information Framework, are often seen as burdens. However, they may also unlock substantial business opportunities for firms willing to evolve, it said.
These upcoming reforms are set to demand IT investment and internal adjustments, but they are also designed to expand the reach of investment services. By encouraging greater financial participation among retail investors, regulators are promoting digitisation efforts that scale operations while maintaining investor protection. For providers that can adapt, these changes offer the chance to attract and retain a broader base of investors.
To understand the opportunity, it helps to consider the historical context. Since the 1950s, the foundations of the investment management industry have rested on “modern portfolio theory”—a framework built around rationality and risk, everyoneINVESTED explained. This theory has earned accolades and underpinned decades of strategy, yet its principles are showing limitations in today’s digital age. Modern portfolio theory struggles to translate smoothly into digitised services.
Part of the challenge lies in its core assumptions. Rationality, while elegant in theory, ignores the human behaviours that influence real-world investment decisions. For years, these gaps were bridged by human advisers. But with the industry now under pressure to scale through digital means, this human-centred approach can no longer be the default.
This brings us to a critical shift. Today, behavioural economics offers richer insights into how people actually make decisions. These insights can now be embedded into digital platforms to guide investor behaviour effectively.
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