Standard investment account vs. retirement savings account: Where the opportunities differ
At the heart of the reform are two distinct account types, each with its own rules and favoring different business models.
The standard investment account: ETF‑driven, cost‑capped, digital
The standard investment account will become the blueprint for a radically cost‑efficient offering, expected to be predominantly exchange-traded fund (ETF)‑based. A strict cost cap forces providers to develop low‑fee solutions, where every basis point of margin has to be calculated precisely. This makes the standard account particularly suited for standardized, highly scalable investment concepts that can be distributed at scale, especially through digital platforms and direct channels.
More complex products are therefore likely to play only a limited role. Their higher cost base makes it difficult to fit them economically within the regulatory cost cap.
“In the standard account, efficiency trumps everything, this will be the playground of ETF providers and high‑scale digital platforms,” explains Heymann. “To compete, you need not just cheap products, but genuine digital excellence.”
The retirement savings account: Higher value creation, greater design freedom
By contrast, the retirement savings account offers significantly more flexibility. As it is not subject to a cost cap, providers can develop more differentiated, higher‑quality, and generally higher‑margin solutions. The design spectrum ranges from mixed solutions combining ETFs and traditional active funds through to strategies that incorporate alternative investments. For wealthier client segments, European long-term investment funds (ELTIFs) and other private market allocations become particularly relevant as providers look to offer exposure beyond traditional liquid markets.
This flexibility also supports more holistic portfolio solutions. Discretionary mandates allow clients to access fully managed portfolios, while multi-manager concepts combine the expertise of several specialized asset managers. Lifecycle approaches, which systematically adjust asset allocation over time to reflect the client’s age and risk‑bearing capacity, are expected to play a key role as well. These approaches are likely to be implemented at portfolio or account level, rather than through single‑fund solutions.
“The retirement savings account is the stage for differentiated, value‑add solutions, from wealth management‑style mandates to private market satellites,” says Heymann. “This is where providers will prove whether they can move beyond pure product supply to truly client‑centric solutions.”
Insurers under pressure, fintechs setting the pace
The reform will not affect all providers in the same way. Insurers, fintechs, and banks each enter the market from very different starting positions.
Insurers are facing substantial pressure to adapt. Many of them are constrained by legacy IT systems that are fragmented, inflexible, and often not designed for rapid product innovation. At the same time, insurance product development cycles tend to be long, which can become a significant disadvantage in a market that is evolving quickly. As a result, insurers are increasingly forced to make strategic decisions about cannibalizing parts of their existing guarantee and retirement products portfolios to make room for new investment-based solutions.
For many insurers, offering a standard investment account may become a precondition for remaining competitive with guarantee‑based products. But success will also depend on the sales model. Insurers will need to decide how to remunerate agents and advisors so that the new products receive adequate attention in the advisory process.
They will also need to manage regulatory complexity around different licensing regimes, including the Markets in Financial Instruments Directive (MiFID), §34f license and §34d intermediation, and ensure that their sales forces are correctly licensed and qualified. Moreover, liability and supervisory aspects will have to be carefully incorporated into product and distribution architecture.
“The biggest market drivers will be the insurers,” emphasizes Heymann. “They must quickly decide whether they want to cannibalize themselves, or be cannibalized by new entrants.”
Fintechs, by contrast, are moving with greater agility and opportunism. Many see the new subsidized retirement framework as a major scaling opportunity, enabling them to acquire and serve large numbers of clients efficiently through digital channels. Their growth strategies are typically data‑driven and marketing‑led, using customer insights, algorithm‑based offerings, and personalized communication to position themselves as modern alternatives to traditional providers.
Fintechs are actively seeking strategic product partners who can supply scalable funds and investment solutions for the new accounts. At the same time, they are very open to co‑marketing concepts and models, including joint campaign budgets, preferential launch conditions or other incentives during the start-up phase.
Banks are taking a less uniform approach. In the retail segment, the market is largely predetermined by existing “captive” structures: savings banks and cooperative banks are expected to work primarily with their inhouse products, creating relatively closed ecosystems. Private banks, on the other hand, have so far been more cautious. For many, retirement savings is central part to the business model, which leads them to observe the market rather than compete aggressively for shares in the new subsidized products.
No broad-based distribution without smart incentives
The emerging discussion around distribution and incentive models makes one point very clear: market success will not be determined by product quality or pricing alone. The economic incentives for distributors will be equally decisive.
Three broad models are currently being explored. The first is the use of ongoing commissions or trailer fees, which can in principle also be structured for ETFs, although the very low fee base limits their economic attractiveness. The second is the idea of temporary margin waivers, where providers give up part of their margin and redirect it to distributors while remaining within the regulatory cost cap. The third consists of upfront incentives for strategic partners, such as insurers, platforms or fintechs, including joint funding of marketing campaigns, coverage of onboarding and set-up costs, or support in training and education initiatives.
“Without clearly defined, attractive sales incentives, broad‑based physical distribution will remain illusory,” warns Heymann. “Ultra‑low‑cost products can work, but predominantly through digital channels with the customer as self-directed investors.”
For providers, this means that product architecture, margin design, and remuneration structures must not be designed in isolation, but within an integrated approach. Those who focus solely on price leadership, without a viable distribution model and without clear advisor incentives, will struggle to gain meaningful market share.
Tax and domicile: Secondary at launch, strategic in the second wave
In many established product segments, tax structuring and fund domicile choices are central strategic considerations. For the new retirement accounts, however, the initial priorities appear to lie elsewhere.
At present, there appears to be no significant tax or regulatory disadvantage between Germany, Luxembourg, and Ireland as fund domiciles for products under the reform. Providers can therefore leverage existing platforms in Luxembourg or Ireland, or launch vehicles in Germany, without suffering a decisive disadvantage at the starting line.
Technical questions—such as physical versus synthetic index replication, US withholding tax, or the optimization of the Germany–US double tax treaty—are certainly on the agenda. But they are not expected to dominate the first product launch phase.
“The tax dimension will not play a decisive role in the first rollout phase,” notes Carmen Thölkes, Investment Management Partner at Deloitte Luxembourg. “Time‑to‑market, technology readiness, and distribution are clearly dominating priorities. Tax fine‑tuning will become a topic for the second wave, but it will come.”
For asset managers, speed and execution capability currently matter more than optimizing the last few basis points of tax efficiency. At the same time, structures should be designed so that future tax or domicile optimization steps remain feasible and are not blocked by initial design choices.
Large asset managers: From product supplier to ecosystem partner
ETF providers are naturally perceived in the market as core partners for the standard investment account, given their ability to deliver the low-cost building blocks required for competitive solutions. At the same time, competition is intensifying, both among ETF houses and active managers. Some global players are using a “closeness to the market narrative,” a strong local presence and faster decision‑making processes to position themselves as preferred partners for new retirement offerings.
“For many global houses, the core strategic question is whether they want to remain pure fund providers or evolve into full‑fledged ecosystem providers for retirement solutions,” summarizes Heymann. “The regulatory framework clearly favors those who think beyond the individual product.”
Governance flexibility is also becoming a priority. Many product providers are reluctant to commit to a fixed list of funds over the long term and instead seek the ability to replace, add or remove products as market conditions and strategies evolve. This is driving interest in white-label constructs and service management company structures, which can bundle strategies from multiple providers under one platform. Such models are particularly relevant for larger, more sophisticated players with the necessary governance infrastructure and platform experience.
