Millions could be aided in managing their finances more effectively with existing advice, yet further efforts are required to disseminate these financial management strategies more broadly.
In an effort to bridge the financial advice gap, which affects millions of adults in the UK, the Government plans to roll out targeted support from early next year. This initiative comes as a response to the growing need for affordable and beneficial financial advice, particularly among everyday families and consumers with relatively straightforward financial needs.
One model that has shown promise in addressing this gap is Basic Advice, a financial advice model introduced in 2005. Nici Audhlam-Gardiner, Chief Executive of Foresters Financial, emphasizes the importance of this model, stating that it is ideally suited for those with specific but simpler financial needs. Basic Advice involves personalized consideration of an individual's overall financial goals, risk tolerance, and personal circumstances to offer specific recommendations.
Despite its potential, Basic Advice has faced operational challenges in the past, limiting its reach. However, recent analysis suggests that it could potentially address up to a quarter of the UK's financial services advice gap. This significant impact could be realized if properly implemented, according to the Financial Conduct Authority (FCA).
To complement Basic Advice, the FCA has proposed the introduction of Targeted Support. This model involves firms providing "ready-made investment suggestions" tailored to groups of consumers sharing common characteristics. Unlike Basic Advice, Targeted Support does not require the typical personal suitability assessments under COBS 9 and 9A rules.
The key distinction between Basic Advice and Targeted Support lies in their personalization and regulatory requirements. While Basic Advice offers individualized advice based on thorough personal assessments, Targeted Support provides group-based advice tailored to consumer segments without personal suitability checks.
Targeted Support is particularly aimed at helping new investors, those under-saving for retirement, and those struggling with knowing when they should access their pension. It represents a more scalable and accessible solution, offering "better than guidance" services.
Nici Audhlam-Gardiner, Chief Executive of Foresters Financial, supports the authorities' drive to tackle the advice gap but urges them not to overlook Basic Advice. Foresters Financial, the only firm that has offered basic advice in an economically viable way, calls for the Government to widen the scope of basic advice and encourage wider adoption of the model across the financial sector.
With modest changes to its scope, basic advice can be scaled up at pace, addressing the needs of up to 2.5 million adults who require financial advice, according to estimates. The white paper published by Foresters Financial aims to inform the debate about basic advice and its potential role in improving long-term consumer financial resilience.
As the FCA continues to explore how Basic Advice can be effectively expanded as part of broader strategies to improve financial outcomes for consumers, the introduction of Targeted Support may serve as an important middle ground to help more consumers improve their financial decisions, especially in retail investments and pensions where the advice gap is most pronounced.
[1] Financial Conduct Authority, "Advice Unit's call for input: Basic advice", 2021. [2] Financial Conduct Authority, "CP25/17: Targeted support", 2025. [3] Foresters Financial, "White paper: Basic advice", 2022. [4] Nici Audhlam-Gardiner, "The case for basic advice in addressing the financial advice gap", 2023.
- The Government's initiative to address the financial advice gap in the UK includes plans to roll out targeted support from early next year, focusing on helping new investors, those under-saving for retirement, and those struggling with knowing when to access their pensions.
- Foresters Financial, the only firm that has offered basic advice in an economically viable way, calls for the Government to widen the scope of basic advice and encourage wider adoption of the model across the financial sector, potentially addressing the needs of up to 2.5 million adults who require financial advice.
- Nici Audhlam-Gardiner, Chief Executive of Foresters Financial, supports the FCA's drive to expand basic advice but emphasizes the importance of addressing operational challenges to ensure it can reach more people.
- In addition to basic advice, the FCA has proposed the introduction of Targeted Support, a model that involves firms providing ready-made investment suggestions tailored to groups of consumers sharing common characteristics, as a more scalable and accessible solution for improving financial decisions, particularly in retail investments and pensions.
