Firms that ignore targeted support do so at their own peril, Dynamic Planner has warned.
In the latest episode of its podcast Connected: Targeted Support: How will we ensure it’s delivered? the digital advice platform tackles a number of misconceptions about the new targeted support rules.
Targeted support was introduced this month allowing firms to provide tailored financial suggestions to specific groups with shared needs, such as pension drawdown or investment choices.
It is designed to bridge the gap between generic guidance and personalised, full financial advice.
Dynamic Planner said the new regulation “sets a challenge” to the industry to improve the quality and quantity of its engagement with clients and can present an opportunity to those who embrace it.
Chris Jones, financial services director at Dynamic Planner, said: “Described as a ‘once in a lifetime opportunity’ this is part of a coordinated series of changes intended to put the consumer first and drive growth through investment. It is a threat if you ignore it and an opportunity if you embrace it and the technology we, as an industry have, to support it.”
Dynamic Planner said that despite the belief that only big firms can offer targeted support, stemming from the regulatory minimum capital requirement of £500,000, there is nothing to stop a firm whose primary business is advice or wealth management running a successful targeted support service.
Furthermore, firms that believe that their clients will not be targeted should be aware that many firms will have their clients’ data and permission to contact them. Dynamic Planner described it as a “numbers game” and said eventually something will land with someone.
Dynamic Planner also dispelled the misconception that targeted support is “just a D2C process”, pointing out that many consumers won’t go straight through a targeted support journey to purchase and it may take multiple and varied suggestions before they act.
Jones continued: “Firms now have the opportunity to do things differently – efficiency is one thing, but does that mean you should keep doing things the way you’ve always done? Both targeted support and simplified advice demand the industry to use its collective ability to help clients truly understand the meaning of advice being given, explain clearly and meaningfully what the products or services can do for them, and deliver that through the most effective mechanism. That is in the gift of the adviser, and it’s really powerful.”
Simon Farrant, proposition, commercial and change consultant, added: “The new Targeted Support regime as part of the Government and regulator’s broader package of reforms has the potential to benefit consumers at significant scale and offers benefits to firms beyond those that choose to seek authorisation and offer the service.
“Some of the many benefits of the new regime is that it can offer a pathway to advice and wealth management services and provides the regulated industry a stronger voice in the face of an environment where consumers are increasingly being presented with advice outside the regulatory perimeter.
“So don’t rush to judgement. Use the information put out by the FCA and others to understand what this regime and the proposals on simplifying the advice rules can do, and whether that will be useful in the context of your clients, your firm and your plans.”
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