Phil Young at Zero Support LLP, known to most advisers has told the trade press he is surprised how little interest there has been among advisers about targeted support.
Let me not cast stones at advisers, I haven’t been active in the consultation the FCA has had with the groups it feels will offer “targeted support”. Like me it seems that financial advisers don’t find simplified targeted support interesting to them. So, we’re all on the naughty step!
The FCA recently concluded a six-week policy sprint on how providers, banks and platforms could offer targeted support, with the likes of St James’s Place, Quilter and Hargreaves Lansdown taking part. I suspect that this was compliance rather than marketing.
Decisions about pensions and retail investments are complex and consumers need support.
A spokesperson for the DWP said it does not comment on speculation about popularity of targeted support
‘Our Pension Schemes Bill will help over 15 million people, including by bringing savers’ pension pots together in one place which could boost pension pots by £11,000, while our pensions dashboard programme will empower individuals to better prepare for retirement,’
This is civil service for “get on with it, it’s going to be the law”.
What is evident to people whose market is the workplace is that this mass market that will get targeted support and the dashboard as an entitlement. The well-heeled segment of the workforce who are acceptable for regulated advice will continue to be selected. It will be like going to state and private schools and hospitals.
Pensions and retail investments have a vital function allowing people to build wealth and provide income for later life. We want people to invest for their future with confidence, understanding the rewards, risks and protection they will get.
This cannot be taught by targeted support but you can learn most things with the help of artificial intelligence or at least on-line information. So targeted support is the framework for people’s learning, a platform for those who want to self-educated
Decisions about pensions and retail investments are complex and consumers need support. The FCA are clear that the equivalent of a state education can get people by, provided it is a sound platform.
This consultation sets out our proposals to introduce a new form of support, called targeted support. Our targeted support proposals will enable firms to provide suggestions designed for groups of consumers with common characteristics to help them make financial decisions.
This consultation also sets out our early thinking and direction of travel on simplified advice and clarifying the Advice Guidance Boundary.
And the FCA are detailing who will be providing targeted support
- Pensions and investment firms including fund and wealth managers, platforms and SIPP operators.
- Pension trustees and trust-based pension schemes.
- Banks, building societies and other firms such as friendly or mutual societies.
- Financial advice firms (particularly Chapter 9 on simplified advice).
- Trade bodies, professional and consultancy firms.
- Consumers, groups representing consumers’ interests and those who support consumers with their decision-making.
There is a great difference between telling people what they can do and what to do. No matter how short those emboldened words are, financial advisers have worked out that information is free but that the instruction on complex retail strategy’s implementation is valuable and advisers make money out of it.
Targeted support is of course valuable to those who are offering pensions commercially and that includes employee benefits, but the workplace is a notoriously difficult place for professional advisers. For the most part , workplace savers have not had financial advice and it looks from what Phil Young is saying, financial services do not consider their technical capabilities are best deployed on the basics.
We need something between the paid for financial advice and the high level support supplied by the Money and Pensions Service and the regulated financial services needed to get it right.
I think Phil is right to make this differentiation. But we must also recognise that information will in future be delivered by technology and in particular by artificial intelligence. The quality of interaction between machine and human is improving all the time and every time it works, humans will be more willing to.
The FCA are learning from interaction (or lack of it) with advisers over “targeted support” where the Advice Guidance Boundary Review is being drawn. It is working the boundary out by experimentation with consumers rather than advisers and this is quite right.
I suspect that the Pension Schemes Bill will turn to Act and deliver products that people understand as pensions. The questions they will have will be about the income paid to them, to dependents, its sustainability and the pay they will get from their pensions as time goes on. These offer optionality but not opportunity for financial advisers.
A state education style “targeted support” will require modellers that people can use to get answers to questions. It should not offer regulated advice as to what to do. There will be opportunities for those who want to be told what to do (especially where tax become important) to pay for it.
I am very pleased with the way that the FCA are conducting the consultations that lead to the introduction of targeted support and am comfortable both as a pensioner and potentially a “provider” of targeted solutions , that it is being carried out like this.
I went through the FCA’s “sandpit” with my firm and see this as the next stage for the FCA. Targeted Support is not in the sandpit; it is helping construct a new type of retirement plan. It should not be confused with Financial Advice (specialist) nor Pensions Wise (universal), it is about getting things built (targeted).
I wrote about this earlier in the summer when the last consultation was launched
