The Advice Guidance Boundary Review was launched in 2022 as part of the Edinburgh reforms. Three years later and we’re very close to a new regulatory framework for targeted support – an initiative that has the potential to significantly reduce the advice gap in the UK.
Across this period we've been really focused on shaping the FCA and HM Treasury’s targeted support policy. But now that we are getting so close to final rules, it’s time to think in more detail about targeted support (TS) implementation.
Our report Targeted Support: Designing for Success, published in partnership with Baringa, looks at readiness, high-level targeted support design and the challenge of segmentation. The findings are based on a survey of eight of our member firms, undertaken in October, alongside discussions between members, Baringa and ourselves. Here we’ll unpack some of the main findings from the report.
Preparation, risks and concerns
The survey shows strong ambition to launch TS across the sector, with most respondents aiming for a 2026 launch of their targeted support services. But most firms are still in the planning or awareness stages. Early adopters face a demanding pace, complicated by regulatory ambiguity and concerns around commercial sustainability. Capacity and change fatigue are notable barriers, especially for workplace pension providers that must deliver TS alongside other upcoming major initiatives including the Value for Money framework and guided retirement.
A ‘Situation-led’ approach
A clear preference emerged for a ‘situation-led’ approach to designing TS services. This is where firms identify scenarios where consumers can benefit most and use these situations to define segments and suggestions. Firms saw this method as not only more intuitive, but the most efficient route to achieving ‘better outcomes’ for customers. One risk however was that the approach risks overlooking less obvious customer groups. The alternative ‘suggestion-led’ approach - starting with a product and identifying suitable customers - was less favoured, with concerns about regulatory perception and limited scope for innovation.
The challenge of consumer segmentation
Consumer segmentation was found to be the most challenging aspect of TS implementation. Firms are striving to create segments that are granular enough for relevant support, without crossing into personalised advice or demanding excessive data. Data quality and availability remain ongoing concerns, and firms anticipate an iterative process of refining segmentation and suggestions as TS matures.
Conclusion
The findings highlight an industry committed to implementing TS, tempered by regulatory uncertainty and operational complexity. Success will depend on prioritising situation-led design, developing a minimum viable product and building up from there, leveraging technology, and ongoing collaboration with regulators. By working collaboratively and proactively, the industry can ensure that TS delivers on its promise of better outcomes for all consumers.
This is the first of two reports on targeted support that we will publish – watch out for the next!