Targeted Support has arrived this week as planned and it has only taken a few days for two major companies, Royal London and Quilter, to join the fray. Many more will follow.
I’m on record as saying that Targeted Support could be a real boon for those who cannot afford full Financial Planning advice and must rely instead on friends and family or even the vagaries of the internet for some form of money guidance.
Targeted Support should be a good thing for UK plc. For regulated advisers - I’m not so sure.
Until now the general view has been that Targeted Support will help to reach an audience which Financial Planning, and regulated human financial advice, does not currently serve, at least not in any meaningful and effective way. Millions take a punt in the dark on their finances each year or simply bury their heads in the sand when it comes to their finances and that needs to change. Targeted Support will be part of that change.
However, I’m a little less certain on the benefits for Financial Planners. Some, including those firms looking to offer Targeted Support, argue that the new guidance offering should eventually steer some people towards regulated financial advisers, particularly if their affairs are more complex or become more complex.
Yes and no. This could be the case but I wonder how many providers will be that keen to let a client move to a regulated Financial Planner outside of their business. Passing Targeted Support clients to a Financial Planning type-service controlled by the Targeted Support provider makes sense but losing that client to an external Financial Planner makes less sense. Clients are the glue that hold any advice business together and few companies want clients to move on without good reason.
It is early days and I do not want to be a party pooper. There is much to support about Targeted Support but in our new world of AI-support services, nudges to group of people with ‘common characteristics’ and a general effort to encourage more consumers to plan their finances better and avoid leaving money stagnating in cash accounts, it is clear that things will change and that disruption could be adverse to planners if it's not well managed.
Financial Planners will need to keep a close eye on the new services to ensure they are sticking to what they should be doing because there are risks that some, perhaps lower value clients, could choose a cut down Targeted Support service for the long term rather than embracing Financial Planning.
Monitoring the boundary between Targeted Support and Financial Planning will also be a long-term challenge and the regulators will need to ensure that full Financial Planning advice, with all its benefits, is not replaced with a cheaper, cut down service which pushes profitable products at the cost of holistic and human guidance.
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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days. Email:
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