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What does the future of pensions actually look like for Europeans in their thirties, and how should they invest in a market where truly independent advice is still rare? In this episode of the Bondfish Human Finance Podcast, host Anatoly Shkareda, Chief Marketing Officer of Bondfish, is joined by Alessandro Ciccolo, an independent fee-only financial advisor based in Genoa, Italy, and a member of Finanza SCF. The conversation covers the deep-rooted investment habits of Italian savers, the structural challenges facing Europe's pension systems, the hidden conflicts of interest in mainstream financial advisory, and how foreign investors should think about Italian assets within a diversified portfolio.
Italian Investors
Alessandro Ciccolo opened the discussion by sketching the profile of the typical Italian investor. Italians, he observed, are disciplined savers by cultural inclination, yet the way in which they deploy those savings remains markedly conservative. According to data from the Bank of Italy, roughly 45% of household financial assets sit idle in cash or deposit accounts. Only around 19% of Italians have exposure to mutual funds, shares, or ETFs. The dominant choices, where investment occurs at all, remain real estate and government bonds.
Ciccolo attributed this pattern in part to relatively low financial literacy across the Italian population. Italy's score in the OECD's adult financial literacy survey sits at around 11.1 out of 21, notably below the OECD average of approximately 13, a gap that Shkareda noted seems to be a recurring complaint across European markets, from the United Kingdom to France to Spain, though the Italian data makes it concrete and measurable.
The Italian passion for government bonds, in particular for Buoni del Tesoro Poliennali (BTPs), has a dual explanation. Culturally, the BTP is perceived as the safest possible asset outside of real estate, a legacy view that has proven remarkably resilient across generations. But there is also a powerful financial incentive: Italian retail investors pay capital gains tax of only 12.5% on Italian government bonds, compared with 26% applied to equities and most other instruments. This preferential tax treatment, Ciccolo noted, is not incidental. The Italian government, fully aware of the domestic appetite for its own debt, has accelerated issuance of retail-targeted bond products in recent years, leveraging that loyalty to finance a public debt stock that stands at roughly three trillion euros, or approximately 140% of GDP. A notable feature of this debt, he added, is that an unusually large share is held domestically, a deliberate policy outcome that Italian authorities regard as a source of stability in periods of market stress.
“The average Italian sees investing in real estate and government bonds as the safest things to do. The BTP is a safe asset in their minds, and the government knows this and pushes for more retail investors to buy more debt.
— Alessandro Ciccolo, Independent Financial Advisor, Finanza SCF
The Advisory Landscape
The conversation turned to the structure of financial advisory in Italy, and the significant obstacles ordinary investors face in accessing genuinely independent guidance. Ciccolo explained that the dominant model remains the bank-tied consultant: under Italian law, an advisor employed by a bank is legally defined as working for the bank, not the client. This creates an inherent conflict of interest, as such advisors are financially motivated to recommend the active mutual funds and proprietary products that generate commissions for their employer, regardless of whether those products represent the best outcome for the individual investor.
The fee-only model, where an advisor charges the client a flat annual fee and holds no commission interest in any product recommended, began to develop in Italy around 25 years ago but remained marginal for decades. A meaningful structural shift came in 2018, when the Ministry of Finance established a national register for financial advisors, formally distinguishing between bank-tied consultants and independent, fee-only practitioners. Today, Ciccolo estimated, there are around 50,000 advisors working within the banking distribution model, while the fee-only community reached approximately 1,000 registered practitioners only recently, a still-small cohort but one that has been growing steadily year on year.
Ciccolo described his own practice as defined by an obligation to act in the client's interest, explaining that financial education is a core component of every advisory relationship. His benchmark for a successful engagement, he said, is a client who has learned enough through the process to feel capable of continuing independently, if they choose to do so.
The Pension Question
Perhaps the most sobering section of the episode addressed the long-term sustainability of European pension systems. Shkareda noted that the median age of Bondfish users is around 37, a cohort whose retirement prospects are directly shaped by demographic forces that are already well advanced and difficult to reverse. Italy faces this challenge in an acute form: it has one of the oldest and fastest-shrinking populations in Europe, with birth rates declining every year and the working-age population contracting relative to the number of pension recipients.
The Italian pension system, Ciccolo explained, operates on a pay-as-you-go basis: those currently in employment fund the pensions of those currently retired. As this ratio shifts, the arithmetic deteriorates. By the time today's thirty-year-olds approach retirement, the number of workers contributing per pensioner will be materially lower than it is today, making current benefit levels very difficult to sustain. Governments facing this reality have limited options: raise the retirement age, reduce benefit levels, or increase contributions taken from active workers. All three are politically costly and socially contested, as the sustained public reaction to France's recent pension reform demonstrated.
Ciccolo's conclusion was direct. He did not anticipate that public pensions would disappear entirely, but argued that average pension income will be substantially lower for future retirees than for current ones. The implication for individuals is clear: private investment, sustained over a long time horizon, is the only meaningful way to fill the gap between a diminished public pension and the lifestyle expectations of retirement.
“People in their thirties must save and invest as much as they can, because if the demographic decline is not reversed, nobody will be there to pay their pension. You need to invest. Period.
— Alessandro Ciccolo, Independent Financial Advisor, Finanza SCF
Practical Application
Asked to sketch a portfolio framework for someone in their twenties or thirties, Ciccolo offered a starting point while stressing that the correct allocation is always individual, shaped by risk tolerance, financial goals, and time horizon. He cautioned that being young does not automatically translate into a high capacity for tolerating market volatility; the psychological dimension of investing is as important as the financial one.
Anchor to equities. Ciccolo's suggested baseline allocates at least 50% to global equities, providing the long-term growth engine necessary to build wealth over a multi-decade horizon and compensate for the expected shortfall in public pension income.
Diversify within fixed income. Around 40% allocated to bonds, but not exclusively to domestic government bonds. A broader fixed income mix spanning corporate and international government bonds offers better risk-adjusted diversification than a single-country exposure.
Add real assets as a low-correlation buffer. The remaining allocation should cover commodities, particularly gold and silver, whose low correlation with equity and bond markets provides a stabilising function during periods of stress in financial assets.
Approach structured products with caution. Bank certificates, popular in Italy and increasingly marketed across Europe, are combinations of derivatives packaged to look like simple yield instruments. Their complexity and illiquidity make them unsuitable for investors who do not fully understand the underlying terms, regardless of how they are promoted.
Invest continuously and start early. The compounding effect of long-term, regular investing is the most powerful tool available to a young professional. Delaying the start of an investment programme, even by a few years, has a disproportionate impact on terminal wealth relative to almost any choice of instrument or allocation.
Foreign Investment in Italy
The final substantive section of the episode considered Italy as a destination for foreign investors seeking geographic diversification. Ciccolo acknowledged the well-documented structural headwinds: a demographic decline, low birth rates, a contracting working-age population, and a high public debt burden. At the same time, he highlighted factors that sustain Italy's international relevance: its status as a premier global tourism destination, the enduring strength of its manufacturing and automotive brands, and the scale and international presence of institutions such as UniCredit.
On the question of Italian government bonds, Ciccolo noted that the sovereign credit rating has recently been upgraded by the major rating agencies, reducing the perceived risk premium for foreign holders and making BTPs a more credible diversification instrument. His suggested allocation for foreign investors was modest: up to 5% of the bond portion of a portfolio. For Italian equities, he expressed greater caution. The FTSE MIB index took approximately 17 to 18 years to recover to its pre-2008 financial crisis peak, even before accounting for dividends. Its composition is heavily concentrated in the financial sector, which accounts for close to 48% of total index weight. Ciccolo himself holds Italian bonds but no Italian equities, directing his equity exposure instead toward global markets where he believes the structural growth opportunity is greater. A small position of 5 to 10% of the equity allocation was the outer limit he would recommend to a foreign investor.
“I go where performance is, and we all know that it's the US, it's not Italy. The index is growing, yes, but the real performance is made overseas. I own bonds, but I don't own Italian stocks. The market is simply too small.
— Alessandro Ciccolo, Independent Financial Advisor, Finanza SCF
Ciccolo closed the conversation with three reading recommendations for investors who wish to deepen their financial understanding: "The Psychology of Money" by Morgan Housel for its insights into how personal beliefs and emotions shape financial decisions; "The Behavioral Investor" by Daniel Crosby for its treatment of the psychological dimensions of buying and selling assets; and "The Intelligence Trap" by David Robson, a work on cognitive bias with direct applications to how individuals manage their savings and investments.
Summary