As we edge closer to the launch of targeted support, I wonder if the regime has a much bigger intended outcome.
The framework aims to help narrow the advice gap in pensions and retail investments and at its heart, we understand the purpose of targeted support is to ensure that customers have enough knowledge and understanding to make good decisions, even if they are not paying for financial advice.
However, the complexities of products and services perpetuate the perception that regulated products are too ‘technical’ for the average person to understand. Hence the need for ‘expensive’ advice.
Furthermore, advice, when it’s taken, can still lead to complaints and poor customer outcomes – recent Financial Ombudsman Service (FOS) upheld rate data demonstrates that over complicated products and poor communication standards remain a significant issue.
See also: Oxford Risk: Getting ready for targeted support with behavioural suitability
In short, customers do not understand the risks of what they’re buying. With less than a tenth of the UK currently receiving advice, targeted support, if unsuccessful, could create significantly more harm than good.
The Pensions Regulator (TPR) noted in March 2025, that over a third of people are under saving for retirement and that 75% of Defined Contribution (DC) pension members don’t have a clear retirement plan. From these statistics, it’s clear that closing the advice gap is of critical importance when it comes to avoiding pensions poverty.
Targeted support, hot on the heels of consumer duty and the vulnerable customer regimes, is a further layer from the regulator to provide structure for firms to ‘get it right’ when supporting consumers toward good outcomes.
The legislation could finally address the ‘too complex and too expensive’ barriers that prevent customers from purchasing essential products and accessing services that protect their financial future. If successful, reducing socio-economic burdens on the government, improving customer understanding and reducing demand for services like moneyhelper.org
Targeted support offers the opportunity for wealth providers and advisers to simplify products and reinvent their communications, making financial services accessible for all.
What we don’t know, and can’t predict, is whether future regulatory reviews will redefine targeted support (or components therein) potentially resulting in fines to firms for mis-selling. As an industry, we need to ensure targeted support is delivered right first time, so it doesn’t become the next big remediation programme and the immediately obvious challenge for the sector will be operationalising the regime while maintaining profitability.
The framework invites a transformative relaunch of business models, ensuring they are flexible enough to grow with customer understanding, changeable customer expectations and future regulatory evolution.
Solutions must be designed holistically to ensure customers have confidence in the decisions they’re making. The key component won’t just be the interface used to provide the end user experience – the process design must also be supported by effective and clear customer communications.
Firms will need to implement scalable and appropriately safeguarded solutions. Achieving the margins required on a ‘no fee’ service will require high conversion rates, and firms need to gather the right insights that support future proposition development.
See also: Do the FCA’s targeted support proposals go far enough to close the advice gap?
At the same time, firms must guide customers to the right outcomes and provide simple, clear explanations that demonstrate no advice has been received.
The biggest challenge will be how firms ensure that customers understand what they’re buying, safeguarding against financial detriment claims or complaints.
Targeted support done right could be a game changer – not just for customers, but for the whole industry.
Jo Fulford is a wealth consultant at Simplify Consulting
