Overview
Fidelity welcomes the Financial Conduct Authority's targeted support framework going live. We believe this represent a transformational step towards supporting consumers to both avoid harms and make better decisions in relation to savings, pensions, and retirement. It should help bridge the gap between advice and guidance, helping consumers make better informed financial decisions.
What is targeted support?
Targeted support came about due to the persistent advice gap in the UK: many consumers either can’t access or can’t justify the cost of full financial advice, yet generic guidance often isn’t enough to support good decisions. Driven by the FCA, it will create a new middle layer of regulated help that improves outcomes in a way that is scalable and consistent. In normal speak, the goal is to get people closer to their goal. Say, for example if you wanted to get to St. Pauls Cathedral from Manchester:
- Generic guidance: Here is a timetable of every train & bus leaving Manchester today.
- Targeted support: The 16:42 from Manchester Piccadilly will bring you to London Euston, where you’ll be much closer to St. Paul’s Cathedral.
- Bespoke advice: I’ll get a cab to pick you up from the Manchester hotel you’re staying in and drop you right outside St Paul’s Cathedral.
It’s designed so that more members can receive meaningful help at key moments without the cost and friction that goes hand in hand with full regulated advice. Firms will identify groups of consumers with shared needs and give them specific suggestions they can act on.
What can we expect from targeted support?
For consumers: The aim is to put people in a better position to achieve better long-term financial outcomes through timely, relevant support at key decision points. It will help them improve their position and avoid common pitfalls. Delivered under an FCA framework, it also provides stronger protections than generic guidance.
For providers: It allows firms to make ready-made suggestions to help consumers make smarter financial choices without stepping into personal advice territory. At a commercial level, it lets us support more members at no cost to them; to start this will be through digital journeys.
For trustees: We believe pension savers should be able to access the same level of support regardless of the type of scheme they are in. However, trustees including those of master trusts are not generally FCA‑authorised, and the FCA’s targeted support regime is designed for FCA‑regulated firms. As a result, targeted support does not automatically extend to trust‑based schemes in the same way as it does in the contract‑based world.
Despite this, we know trustees are keen to offer something similar. That’s why we’re taking an active role in working with government and regulators to explore how an equivalent form of targeted support (potentially framed as ‘trustee support’, or delivered with appropriate safeguards and/or via an FCA‑authorised partner) could be delivered, and what additional guidance or protections trustees would need to offer it safely and effectively.
When will it go live?
Firms need to apply to the FCA for authorisation to deliver targeted support, as it is a new regulated activity. The application window opened in March, and firms can start to deliver targeted support immediately provided they get authorisation from the FCA.
There are still things that need resolving to make sure that targeted support is as successful as we all want it to be.
In addition to the challenge of being able to offer targeted support to members in trust-based pension schemes, rules about using people’s data for direct marketing (like emails, texts, or calls) can make it harder for firms to contact people about targeted support. This will currently limit the reach of targeted support. To help with this the government has announced that it is introducing secondary legislation to help workplace pension providers reach more of their members with targeted support suggestions. We are supportive of this and working closely with industry, government, and regulators to make sure this helps make targeted support the success it has the potential to be.
Fidelity’s next steps
Our approach to targeted support will build trust rather than merely service transactions, helping us to build a member’s confidence in making informed decisions for their own future. That way we can provide genuine support at the time and place it’s needed, rather than pushing them down pre-defined pathways. We’re guided by three principles designed to protect trust while improving outcomes:
- Digital-first support. This is where we're seeing steady and significant growth in member engagement, so it makes sense to launch where the people are already. It’s also easier to be consistent in the approach to segmentation. Conversations are fluid and can risk running into advice territory unless people stick to pre-formatted scripts, which is the opposite of our approach to conversations with our members.
- Build on what works well. We have a best-in-class member engagement programme that has been refined over years; our principles do not change because of new legislation.
- Scale the approach. Trust is hard-earned and easily lost, and we value our members' and employer partners' feedback on what's working and what is not. We’ll be driven by data with a test & learn approach.
Our members trust us with their life-long savings for retirement and it’s a responsibility we take seriously. We know from ongoing research how people don’t feel confident making pension and investing decisions, and our approach to targeted support will ensure we help them take their next best action while protecting them from harm.
Targeted support is undoubtedly a positive reform in our industry, with the potential to help millions of people who would not otherwise seek advice. However, it needs to be delivered with a genuine focus on consumer outcomes backed up by evidence and restraint. As an industry, we face a choice to treat this as a compliance exercise or as an opportunity to rebuild confidence in investing, integrating targeted support with the overall customer journey that includes education, engagement, guidance, coaching and advice. At Fidelity, we’re clear on the path we’re taking and keen to hear how others are approaching it.