Pensions - Articles - Future for personalised support for pensions and investments


The FCA consultation on targeted support reforms for pensions closes on 13 February. The plans would allow firms to provide more personalised support to clients. The Chancellor has referred to these reforms as a “transformational.” Currently firms can only make individualised recommendations through costly financial advice, or very generic guidance that could apply to anyone.

 The ability to communicate to groups of consumers with common characteristics will allow firms to guide people through investment and pensions choices.

 Coupled with the planned changes to investment disclosures, this will transform how people approach their financial planning and start investing for the first time.

 Allowing firms to proactively nudge clients into action will allow us to tackle harm caused by inertia, leaving excess money in cash savings.
 
 Anne Fairweather, head of government affairs and public policy, Hargreaves Lansdown: “These reforms will transform how we all manage our money. It will enable firms to provide more relevant information, to help consumers balance savings for short term needs, with investment for a better financial future. The reforms will generate growth for investors, growth for the sector, as we innovate, and growth for companies through investment. We’ve been championing the need to change the advice boundary for years and are delighted to see the forward thinking, consumer centric approach that the FCA have designed. This set of reforms puts people at the heart of the system and allow firms to drive better client outcomes. This is the catalyst to a fundamentally different way that people will manage their personal finances in the years ahead.

 The barriers to investment have been very well researched and are around engagement, understanding and ensuring that investment disclosures are understandable. Simple tweaks to the ISA framework will not change behaviour. The targeted support proposals are part of a package of measures from the FCA which will transform retail investment.

 Research carried out using Hargreaves Lansdown’s Savings & Resilience Barometer showed there are 12.1 million households who could reasonably invest to build for their future. Less than half (47%) of them are currently investing. The highest earning households (with incomes over £77,400) are most likely to be investors, but still only around half (53%) are currently investing.”

 The changes proposed from the FCA include:
 • The Advice Guidance Boundary Review – new rules for targeted support will be published for consultation in H1 2025.
 • Changes to disclosures with the proposed Consumer Composite Investments.
 • The new prospectus regime due later this year. It is proposed that the new regime will have “fewer barriers to participation for retail investors.”
  

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