In just a few weeks the FCA’s much-heralded Targeted Support changes will arrive (on 6 April) and the advice world will change for the better - at least everyone hopes it does, because nothing is certain.
Certainly the move will open up doors to new types of financial guidance, with providers able to give much more of a nudge to consumers to move some of their money into investments rather than leaving it snoring away in a dull cash savings account.
All good so far but there are inevitably risks.
When the plans were first announced, some advisers were worried that some savers might shift their money away to lower cost 'generic' advice firms or even worse, might avoid advisers altogether because professional regulated advice is seen as too costly.
More than half of IFAs questioned by Opinium (57%) thought that Targeted Support would help consumers ‘better plan’ their finances, while 46% believed Targeted Support would make it “more likely” people would seek bespoke financial advice in future. Only one in five advisers thought it less likely that people would seek independent financial advice.
Of course, it is early days and we have yet to see the impact of Targeted Support, and indeed which players will join the fray, but at least it arrives with the hope that the changes will be for the better.
It does, of course, come with some regulatory risk. The FCA has done its best to differentiate between ’Targeted Support’ - 'advice lite' if you like - and what we might call 'full fat' Financial Planning advice but there will be grey areas and no doubt some disputes over which is which. I suspect the ambulance chasers are already showing strong interest.
Despite the risks, however, I am sure this is the right direction for the retail finance sector and many advisers seem to agree.
The truth is that with only one in 10 of the population taking regulated financial advice, most likely due to the cost, the vast majority of the population have little to no access to any kind of financial help beyond YouTube videos and some personal finance websites and that cannot be right. It will also never change unless something is done.
My guess is that there is an untapped thirst for more financial guidance and many millions will gain better access to financial guidance. Some with more complex needs will go on to seek full fat Financial Planning and that will be a positive thing. The benefits of consulting a professional Financial Planner remain the same.
Targeted Support may just be the conduit to a bigger financial advice sector to the benefit of the majority of the population.
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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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