Nick French | Commercial Director | Wealthtime

This article is intended for regulated financial advisers and investment professionals only. Wealthtime does not provide financial advice. This information is not intended as financial advice and should not be interpreted as such.

The FCA has published its latest proposal to address the long-standing issue of the advice gap. At the heart of this initiative is the concept of targeted support, a new category of help designed to give firms greater confidence in supporting consumers who fall between unregulated guidance and full financial advice.

Importantly, targeted support is not a replacement for holistic advice. Instead, it is intended to provide practical, actionable help for groups of consumers with similar characteristics who aren’t ready to access personalised advice, but who still need support with financial decisions.

What is targeted support?

The regulator is positioning targeted support as part of a broader “continuum of support” for consumers, which includes five categories:

1. Guidance/information: Unregulated factual help with no personal recommendations
2. Non-personalised advice: Support that doesn’t cross into regulated recommendations
3. Targeted support: Suggestions of products or actions tailored to groups with similar needs, not individuals
4. Simplified advice: Regulated advice based on essential information about a single need
5. Holistic advice: Full, personalised advice considering a client’s entire financial position

Firms offering targeted support will need to make clear that it is not tailored to the customer’s individual circumstances. Under Consumer Duty, they must ensure customers clearly understand what the service does and doesn’t offer. Consumers will still have access to the Financial Ombudsman Service (FOS) if there is a dispute, with the focus of any investigation on whether people understood what they were receiving, so communication will be key.

What does it mean for advisers?

The FCA estimates that just 9% of UK adults take holistic advice[1]. Anything that reaches more of the groups currently underserved by advice and strengthens overall financial resilience should be welcomed. Rather than a threat to traditional services, targeted support will hopefully provide a stepping stone to comprehensive advice when the individual’s needs become more complex. Someone engaging with targeted support today may seek personalised, regulated advice in the future as their financial life evolves, creating the next generation of advised clients.

However, while targeted support may not compete with regulated advice, it seems unlikely that the majority of small and medium advice firms will rush to adopt it. The FCA anticipates that these services will be provided free at the point of use, which raises questions around how firms will fund it, and whether that will limit the type of organisation that will offer it.

The success of targeted support relies on well-defined and managed customer groups. The segments must be broad enough to avoid personalised advice, yet specific enough to be meaningful. Achieving this seems impossible without significant investment in technology and processes.

With that in mind, the commercial opportunity seems relatively clear for organisations like banks, insurers and other financial product providers that already have extensive customer data and infrastructure. Similarly, it may be an option for networks or larger advice firms to provide a cost-effective solution for low-value clients. However, the average advice firm may find it harder to justify the investment required to identify suitable client groups and provide the necessary ongoing oversight.

The targeted support proposal marks a significant step in reshaping how consumers access financial help. While it won’t close the advice gap on its own, it could improve access to support for those who might otherwise receive no help at all. The new framework presents a genuine opportunity to engage underserved segments and, if implemented well, bring more consumers into financial planning, building greater confidence and trust to create the advised clients of tomorrow.

If you have a view on the proposals, the consultation ends on 29 August, so get in quickly if you want to have your say.

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[1] https://www.fca.org.uk/publication/consultation/cp25-17.pdf