The Financial Conduct Authority says it wants to see a thriving and trusted market for full financial advice, simplified advice, targeted support and guidance.
And so it sees targeted support as a potential tool for helping consumers make better financial decisions at key stages of their lives, where they may be vulnerable to poor outcomes.
These could include people who may be currently drawing down on their pension unsustainably, not saving enough for retirement, or who have excess cash sitting in a current account.
In its consultation into targeted support, published at the end of last year, the FCA noted that many people did not have a clear plan for how to take money from their pension pot: for example, 75 per cent of those over 45-years-old reported they either did not have a clear plan for decumulation or did not know they had to make a choice.
The targeted support model is supposed to allow firms to identify situations like under-saving for retirement, unsustainable drawdown, or holding too much cash, and then make suggestions tailored to groups of consumers in similar circumstances.
Caroline Simmons, chief investment officer at Quilter Cheviot, says: “Targeted support should be seen as part of a continuum: from guidance to targeted support to simplified advice to full advice. For underserved consumers, it may create pathways to full advice, especially as personal circumstances become complex.
“For high-net-worth or complex cases, bespoke strategies will remain vital, particularly around drawdown and investment structure.”
AI: an ally, not adviser
Clearly, not everyone will be adopting the targeted support model, but across the industry, there is a push towards automation, so how can that be balanced against the need for deeply personal, empathy-driven advice?
Mark Locke, managing director of communications at the Lang Cat, says technology should be the scaffolding, not the structure, adding that the industry must not lose sight of what makes advice truly valuable.
“The FCA’s focus on targeted support and digital guidance is a welcome step. It promises to bring financial help to people who might never engage with a professional.
“Digital tools can gather data and model scenarios. They can highlight opportunities, flag gaps, and present projections. But only a human adviser can interpret what those numbers mean in a client’s life.
“Two clients may appear identical on a spreadsheet. One might be supporting a child through university while the other dreams of retiring early. Algorithms cannot weigh competing priorities or sense emotional pressure. Advisers can.”
AI is changing the world of work, and in financial advice it can produce suitability reports, review case files, and pre-populate notes, giving advisers back precious time.
“But the question is what we do with that time. If we use it for mentoring, reflective practice, and deeper conversations with clients, AI becomes an ally,” Locke says.
“Advisers can focus on the emotional intelligence that clients value most. Listening, empathising, guiding through uncertainty — these remain human strengths. If automation takes over the client relationship, we risk hollowing out the very skills that define this profession.
