4 in 10 pension holders open to the idea of Targeted Support as FCA moves a step closer to implementation

The FCA has today published its consultation paper on proposed targeted support for pensions, in a direction of travel broadly welcomed by Boring Money CEO, Holly Mackay.

• 12.2 million people are stuck in the Advice Gap today

• Boring Money consumer research finds that Targeted Support could potentially lift 5.3 million out of this gap

• When tested, 42% of pension holders were open to the concept of Targeted Support

91% of consumers are not advised today and cannot get help with some core questions – such as a starter portfolio, DC pension consolidation, what is a sustainable withdrawal rate or how to take a pension. Under current guidelines, many answers to questions about this could be considered a personalised recommendation. And so are a “No Go” area.

Holly Mackay, CEO of Boring Money, comments, “We know that awareness and understanding around pensions is painfully low, so frankly doing nothing is not an option. Our research indicates that Targeted Support could help an additional 5 million people to pull themselves out of the Advice Gap. If successfully implemented, it should of course be a gateway to fuller traditional financial advice, rather than any threat, and could redefine ‘personalised’ support as something more mass market, leaving ‘individualised’ advice as the preserve of the wealthy.”

Boring Money’s data reinforces the low confidence felt by consumers about pensions.

For example:

• Only 41% of non-retired UK pension holders strongly agree that “I have a good understanding of how much I need to save for retirement”, with just 11% strongly agreeing with this statement

• Just 1 in 4 DC pension holders have high confidence that “My pension is invested in good investments” (rated 9-10/10)

For those firms scoping out their response to the direction of travel outlined in today’s Consultation Paper, Targeted Support should not be assumed to be a purely digital journey. Whilst online will play a big role, there may still be a need for human support. When asked what would be most important when choosing where to go for help with long term financial decision, the 3rd most commonly selected feature was “That I can speak to a real person / human”.

Mackay concludes, “Even though the FCA is currently focussed on pensions, this is clearly the direction of travel and so all firms in the investments and pensions market will be considering the broader scope that lies ahead of them. Despite the exciting opportunities, an important elephant in the room is of course liability, and providers will be anxious to understand how FOS fits into the revised ecosystem”.