One of the earliest financial planning principles that has stayed with me is EMILY – Early Money Is Like Yeast. Start early, and the compounding effect does the heavy lifting. Leave it too late, and the opportunity cost is significant.
Many consumers still delay investing, and the evidence in the FCA’s recent policy statement (PS25/22) – Supporting consumers’ pensions and investment decisions: rules for targeted support, reinforces this reality. It also highlights a persistent reluctance to invest, driven not by lack of assets, but by lack of confidence and support.
The ‘advice gap’ is real. Less than 1 in 10 people obtain regulated financial advice and many turn to family and friends or social media instead for help. For many that are able to invest, they often hold excess money in cash. They don’t invest because; 24% say they don’t know enough, 12% feel overwhelmed, and 8% say they would like to invest but need support.
Against this backdrop, the FCA’s proposals on targeted support mark a significant moment in the evolution of the advice–guidance boundary. For the first time, firms are being offered a regulated framework that allows them to make specific, actionable suggestions to defined groups of consumers, without stepping into fully personalised advice.
This is a clear opportunity. The FCA is explicit about the scale of unmet need: millions of consumers with meaningful assets are disengaged, under-invested, or making potentially harmful decisions simply because existing advice models are too expensive, inaccessible, or feel out of reach. Targeted support is intended to close that gap, enabling firms to intervene earlier, at scale, and in a way that can materially improve consumer outcomes.
For firms, this opens several strategic possibilities:
- Supporting better retirement and investment decisions across large customer bases
- Deepening engagement and trust without defaulting to full advice
- Creating a credible stepping stone into simplified or holistic advice where appropriate
However, this opportunity is inseparable from responsibility.
The FCA is clear that targeted support is not ‘advice-lite’. It is a regulated activity, underpinned by the Consumer Duty, with explicit expectations around proposition design, governance, communications, and outcomes monitoring. Firms will need to demonstrate that their approaches are genuinely designed to deliver better outcomes, not simply to drive product distribution or commercial advantage.
Most critically, firms will need to tread carefully at the boundary with advice. The regime relies on discipline in consumer segmentation, restraint in the data used, and absolute clarity in communications that recommendations are designed for groups, not individuals. Where firms drift into overly personalised interactions or fail to appropriately manage additional information revealed by customers, the risk is not only regulatory breach but also retrospective reclassification as advice. Firms will need to find this balance: encouragement to innovate and service part of the market currently unsupported, paired with a strong expectation of governance, testing, and accountability. Firms that succeed will be those that treat targeted support as a distinct, carefully engineered proposition, rather than a shortcut around advice requirements.
Targeted support represents one of the most meaningful regulatory opportunities in a generation, but only for firms willing to design with intent, communicate with precision, and put consumer outcomes unmistakably first. This is a new industry wide proposition that will service a segment of consumers that truly need carefully considered support. Firms will need to ensure adequate time and resources are provisioned to develop and implement a proposition that delivers good consumer outcomes, including adequate governance, controls, risk management, process and communication mechanisms.
Through our advisory, resourcing and technology expertise, Square 4 are well positioned to support firms as they develop their propositions, with consumers and good outcomes firmly at the core.
How can Square 4 help?
Square 4 can help you turn the FCA’s targeted support framework into a clear, compliant and scalable proposition that improves consumer outcomes and supports sustainable growth. Our advisory team brings extensive experience across the advice–guidance boundary and Consumer Duty expectations, supporting firms with:
- Proposition design, segmentation and eligibility criteria
- Governance, oversight and risk management frameworks
- Customer journeys, communications and disclosure wording
- Testing, monitoring and outcomes measurement
- Resourcing, implementation support and technology enablement
If you would like to discuss how we can support your business further, please get in touch:
Simon Goryl – Advisory Director (Wealth): sgoryl@square4.com
Luke Wootton – Client Relationship Director (Wealth) lwootton@square4.com.
