The proposed Targeted Support regime offers paraplanners a unique opportunity to help shape how this support is delivered in their firms, says Steph Willcox, Head Actuary, Dynamic Planner.
The FCA’s Targeted Support regime is set to encourage firms to engage with clients who aren’t able or willing to receive full financial advice. It’s clear that firms will be expected to offer more structured, helpful guidance to clients, without crossing the line into regulated advice.
For paraplanners, this offers a significant opportunity to step up and help shape how targeted support is delivered in practice.
What is Targeted Support?
Targeted support is being designed to bridge the gap between generic information and full advice. It will allow firms to offer structured nudges or suggestions to groups of clients with similar needs without having to tailor that support to individual circumstances. The aim is to help more people make better financial decisions, and to reduce the “advice gap”.
Throughout the consultation, the FCA has been clear that this support must be non-personalised, meaning that any guidance offered cannot take a client’s full financial picture into account. Approached correctly, the FCA is confident that this guidance can be useful, timely, and relevant.
What can paraplanners do now?
Here are five ways paraplanners can start preparing:
1. Understand the guidance vs advice boundary
The first step is to read the FCA’s consultation papers and understand where the line is currently being drawn between guidance and advice. This is a new space, and the boundaries are still being designed so paraplanners need to be confident in spotting when something risks becoming a personal recommendation and therefore strays into regulated advice territory
2.Support Client Segmentation
Targeted support relies on grouping clients with similar characteristics.
It’s likely that some grouping of clients already happens within your firm, usually to ensure consistent advice is given for these groups of clients, in general covering investment strategy.
Splitting up potential clients into the most important segments can be done ahead of time and paraplanners are well placed to take the lead here. The key is to ensure the segments are meaningful but not so narrow that the support becomes personalised.
3. Draft and Review Support Materials
Written communications to clients often fall to paraplanners, and this skill can be utilised even further with targeted support. Although communications cannot be personalised, it’s likely that you’ll want to use more general guides that are relevant to your segmented clients. All supporting materials used in targeted support need to be written ensuring that the content is clear, accurate and compliant, alongside the relevant disclaimers.
4. Draft Processes
Even more than the communications sent to end clients; advice firms will all need to prepare new processes for these targeted support customers. Paraplanners should consider what documentation is required for targeted support clients, and the evidence that the advice firm should hold for each client. There will also need to be processes written around segmentation strategies, governance processes, and how outcomes will be monitored.
5. Future planning
Targeted support is just the beginning with the FCA already indicating that it will consult on simplified advice in the future. Paraplanners who get involved early will be well-placed to help firms evolve their propositions as the regulatory landscape continues to shift. You could choose to get involved within your own firm, or you can look to respond to the FCA on its discussion points.
Value opportunity
This is a real opportunity for paraplanners to add value, not just by supporting advisers, but by helping firms deliver better outcomes for clients who might otherwise have never sought financial advice.
The hope is that targeted support clients can convert into fully advised clients down the road, but this is only possible if targeted support does what it is expected to and leads to better outcomes for non-advised clients. It’s in all our best interests to make sure that it succeeds.
