The Intermediary – October 2025 - Flipbook - Page 88
B RO K E R B U S I N E S S
Opinion
Targeted support
means supporting
real people
W
hen the FCA
describes its
new Targeted
Support
regime as “a
framework
for the next 20 to 30 years,” it sets
an ambitious tone. The aim, to help
millions make beer investment
and retirement decisions, could
transform financial wellbeing. But if
this framework is to succeed, it must
be built around how people actually
behave with their money, not just the
data that describes them on paper.
A step forward
The support the FCA’s bridge between
generic guidance and full financial
advice. By allowing firms to offer
ready-made suggestions to consumers
with “common characteristics,” it
promises to close the advice gap for
those who need help but cannot pay
for personalised advice.
That is progress. Yet the
consultation still defines those
“common characteristics” mostly in
demographic and financial terms:
age, assets, liabilities, income, and
product holdings. These describe
people but do not explain them. When
segmentation ignores behaviour,
Targeted Support risks delivering
solutions that appear suitable in
theory but fail in practice.
Behavioural vulnerability
The FCA rightly highlights the need to
exclude from Targeted Support those
with characteristics that could make a
ready-made suggestion inappropriate,
such as poor health that shortens
life expectancy. But behavioural
vulnerability can be just as decisive.
Take two retirees with identical
pensions, income needs, and life
expectancies. One is calm and
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The Intermediary | October 2025
methodical; the other impulsive and
anxious. A flexible drawdown strategy
might suit the first perfectly but could
spell disaster for the second.
Traits such as composure,
confidence, and financial comfort
can now be measured reliably.
Ignoring them leaves a blind spot
that could cause consumer harm and
regulatory risk.
Demographics alienate
The FCA’s own behavioural testing
found that consumers dislike being
shown the blunt demographic
categories they have been placed in.
“65-to-74-year-olds with £100k-£250k
in a pension pot” does not make
anyone feel understood.
The solution is not to hide
segmentation but to base it on
variables that feel authentic.
Behavioural segmentation is more
accurate, more engaging, and less
likely to trigger the resistance that
undermines confidence.
If a Targeted Support journey
states openly, “This solution assumes
a moderate comfort with market
ups and downs,” consumers can
recognise when that does or does not
describe them. Transparency about
behavioural assumptions makes
the service both more honest and
more compliant.
Tech makes this possible
The consultation stresses that rules
should be future-proof. In practice,
the future has already arrived.
Behavioural-finance technology now
allows firms to:
Map behavioural profiles through
short, validated questionnaires.
Cluster those profiles into evidencebased personas.
Link each to a recommended
approach.
GREG B DAVIES
is head of behavioural
finance at Oxford Risk
Communicate suggestions in ways
proven to enhance understanding
and comfort.
This is not theoretical. Oxford Risk’s
data shows that investors with low
composure are far less likely to hold
their positions in volatile markets, and
that adjusting communication style
alone can improve confidence.
Consumer Duty
Consumer Duty demands that firms
evidence “good outcomes” for their
customers. Financial returns are only
part of that picture. The ability to
remain invested, the confidence to act
when appropriate, and the comfort
to sleep at night are equally vital
measures of success.
Behavioural data make these
outcomes measurable. Engagement
rates, confidence scores, and
adherence through volatility can all
demonstrate that a Targeted Support
service is working as intended.
Framework
Targeted Support is a welcome
innovation, but its success depends
on whether it recognises that real
people, not spreadsheets, drive
financial outcomes. The FCA has
built a bridge between guidance and
advice; behavioural insight can ensure
that bridge is strong enough to carry
consumers safely across it.
To be truly future-proof, the
framework must treat behavioural
characteristics as core data, not as
optional extras. Only then will it
live up to its promise: guidance that
is not just technically sound, but
humanly sustainable. ●
