‘We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement. These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike.’
I don’t like to start an article with a long quote, particularly from the Regulator. But this quote from Sarah Pritchard of the FCA in their Press Release of 30th June I think was of significance. Coming just under two years since the introduction of the Consumer Duty obligations of course she was speaking about the “Targeted Support” reforms. The 30th June was the kick off for a detailed “sprint” where firms design consumer journeys to help create the rule details in the Consultation, a very different consultation methodology for the regulator. The Consultation closed on 28th August 2025 and we can expect the detailed rules by end of 2025. As someone who has written about the challenge of the advice gap for some time now, I really hope the statement above by Ms Pritchard becomes a reality.
Would targeted support help the people in this category, i.e. cash rich and limited experience to know what to invest in?
Of course, the industry will be challenged by a number of issues, principally;
- Many will not seek to choose to add the permission to their existing advice permissions under 55A of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. The gateway for authorisation is likely to begin in March/April 2026.
- Appointed Representatives are currently excluded from offering targeted support, but HM Treasury have asked for more feedback on this discrepancy, because of course the AR model is used extensively in the retail advice market.
- The prudential (capital adequacy) requirements are likely to preclude many firms from offering this “service”, aside of the fact that in the mind of the regulator. It is hoped that the service is offered free or at a very low cost. Advice firms are currently required to hold a minimum of £20k, if they seek permission to offer targeted support this will rise to £500k. Quite a leap (!) and coupled with the FCA’s expectation of income generation a disproportionate risk /reward deficit for most (!)
This is of course aside from the rigour of systems and controls to operate the support.
The FCA have defined 3 scenarios where targeted support is being specifically offered;
- Those currently insufficiently saving for retirement
- Those requiring access to pensions
- Those with cash sums, ready to start investing
My experience is with those in the last group, cash sums and in some instances, significant cash sums which should be investing and for whatever reason are not. We all know the staggering amount of money in cash ISAs, bank deposits and I have quoted these many times. It still staggers me when I hear “Is it not safer to keep everything in cash?”
Please remember, I am speaking mainly to older people who are likely to be retired or very close to it. There is still a lot of fear about the “City” burning up their money on long lunches and an extravagant lifestyle for themselves in their suits and red braces. That cartoon character is still peddled by the media and oil is poured on the flame by the continued misconduct by the few.
I have changed tack slightly when speaking to groups, I am now angling the “how do you support your children and grandchildren idea”. This came as I remembered by children’s 18th birthdays (2 years apart). Their paternal grandmother had put £5 p.m. for each grandchild (4 in total) in a non-interest bearing bank account until they were 18. Each of them in turn received £1000 cash in a shoe box on their 18th birthday. Whilst the kids had never seen that amount of cash in £50 notes, can you imagine how disappointed I was (!!). Simple pound cost averaging in even a low risk investment could have meant that would have been a lot more. My mother-in-law had not thought to ask anyone, seek advice or recommendations. Using the bank and a free savings account was all she knew.
I’ve started using this example and of course when asked “but what if it goes down?” I say “great you are buying more for your money”!! Maybe you think it’s too simplistic an example to help explain, how over time small sums put aside (at risk, still in many people’s mind) will help build wealth and beat inflation. Inflation and interest rates are what most of the audience understand and many are watching their children and grandchildren struggle in this economic climate. Many are supporting relatives with cash (one case recently I can think of, where their pension far exceeds their needs and the balance is supporting a son with mental health issues, struggling with the cost of living).
Would targeted support help the people in this category, i.e. cash rich and limited experience to know what to invest in? Personally, I think the answer is yes, but caveated we cannot close the advice gap for everyone. There will be those like my mother-in-law, who won’t think to ask, those who have earmarked additional cash to give relatives struggling (of course the gift rules might still catch them out and that is opening another can of worms) and the number of people who just want to spend it! (My husband wouldn’t argue with that).
The further key question is, who will provide targeted support? And how will they find the people who would benefit from the service? Given the challenges for the industry as outlined in brief above, the expectation is that the product providers and D2C investment platforms will step up. That will require a whole new cohort of staff to be trained on where the advice line is set and how they engage effectively with the target audience?
Without, favouring or advising I’ve been telling people how and where to get more information from. I don’t talk about individual products or firms just “signposting” them to places where they can find out more. Every group I speak to, has limited grasp of investment opportunities and I’m doing that by offering to speak to them, in groups. That requires treading shoe leather, to use the old phrase. I can’t see the big providers setting up “audience with” events, but maybe I’m wrong. Maybe the most important question is actually;
How do we find the people who can benefit from these laudable reforms designed to “help people navigate their financial lives and give them greater confidence to invest”?
Answers on a post card to … 😊
