Millions of people are set to receive “game changing” support to help them navigate their financial lives.
From April 6, some firms can offer targeted support to help people make better-informed decisions about what to do with their money, based on what they would recommend to those in similar circumstances.
The changes mean that people’s banks, pension providers, or other financial firms that are authorised for targeted support can provide suggestions designed for groups of consumers with common characteristics.
Targeted support will help to fill the gap between people receiving general guidance and paying for individualised advice, enabling more people to make informed decisions.
Customers will receive “ready-made” suggestions, designed for groups of consumers and not based on a full, in-depth individual assessment.
In December, the Financial Conduct Authority (FCA) said that at least 18 million people could be offered extra help with their investments and pensions over the next decade with the introduction of targeted support.
According to FCA data, around seven million adults in the UK with £10,000 or more in cash savings could be missing out on the benefits of investing throughout their lives.
Lucy Castledine, director of consumer investments at the FCA, said: “Too many people aren’t getting the help they need to navigate their financial lives.
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“Without the right support to make decisions about their investments and pensions, many people risk falling short in retirement.
“Targeted support is designed to change that. It will help millions of people make better informed decisions and understand the potential rewards and any risks, including of not investing.”
Chira Barua, chief executive of Scottish Widows said: “The arrival of targeted support is a game changer for people who want help with their money but don’t know where to start.
“It bridges the gap between doing nothing and getting full financial advice, empowering millions to make better financial decisions.
“Technology will be key to making that support available at scale.
“Our AI (artificial intelligence) agent in the Scottish Widows app will work like sat nav, by helping people understand their options and choose a route that makes sense for them, based on others on a similar journey.”
A survey commissioned by KPMG UK found that more than two-fifths (44%) of people are confident they will use targeted support if it becomes available to them.
More than half (58%) of people surveyed said they have never sought professional advice on pensions or long-term savings and a similar proportion (53%) said they would welcome being offered targeted support.
Jane Wilson, targeted support lead at KPMG UK, said: “The fact that almost one in two consumers want to receive targeted support creates a once in a generation opportunity to close the advice gap and support the UK’s ambition to create a nation of savers.”
KPMG found that of those consumers who have never sought professional financial advice, nearly a third (31%) feel they do not have enough money to make advice worthwhile, while around a quarter (26%) said it would be unaffordable.
When looking across the age brackets, people aged between 25 and 44 who were surveyed were most open to using targeted support, with 58% of 25 to 34-year-olds saying they are likely to use the support and 56% of 35 to 44-year-olds also saying this.
Those over 65 were the least inclined to access targeted support, at 22%, which KPMG suggested is driven by this age group being particularly likely to have already made pension decisions.
Ms Wilson added: “The notion that financial advice is only needed if you have notable wealth is simply not true; people with modest finances perhaps need support more than anyone else.
“Retirement no longer means handing in your lanyard and putting on your slippers; people work part-time, take on new challenges, or dip in and out of work to suit their changing lifestyles or meet their financial needs.
“The strong appetite for targeted support amongst the young shows there’s a chance to move people beyond saving and give them the confidence to invest for the long term.
“Done well, this can help individuals grow their wealth in line with their ambitions, while also channelling capital into the parts of the economy that drive sustainable growth.”
KPMG commissioned OnePoll to carry out the survey among 2,000 people across the UK in March.
Tom Shields, senior policy adviser, long-term savings policy at the Association of British Insurers (ABI) said: “We’re delighted to see targeted support now becoming a reality.
“After years of collaboration between industry, government and the FCA, this new approach is a significant step towards helping people get the support they need through their financial lives.
“We look forward to continuing to work closely with our members and the regulator as more firms bring the service to market.”
