Financial firms risk missing a golden opportunity in targeted support

Targeted Support presents a golden opportunity to bridge the advice gap and service millions of underserved customers. The question is not whether it will work, but who will have the conviction to move first.

Just 19 firms have used the Financial Conduct Authority's (FCA) Pre-Application Support Service to help them get authorised to offer targeted support, according to a widely reported freedom of information request from consultancy Sicsic Advisory.

Rather than an omission, this should be seen as a striking opportunity. Banks, large advice firms and investment and pension platforms have a rare window to shape a new market before it fully forms. Few regulatory initiatives offer first mover advantage and public policy alignment. This one does.

The targeted support regime, expected to become operational in April 2026, is a new regulated activity that sits between generic guidance and full, personalised financial advice. Firms offering the service will be able to make suggestions and recommendations to groups of people with shared characteristics and financial needs, without straying into individual advice. In other words, scale without recklessness.

This is a sensible regulation designed to solve a long-standing problem. The UK's advice gap has proven stubbornly persistent, leaving millions excluded because advice feels either too expensive, too complex, or simply "not for people like me". Technology has helped at the margins, but often in fragmented ways. Targeted Support is different: it is systemic, scalable and pragmatic.

One could reasonably argue that large financial institutions now have a leadership opportunity. Financial literacy in the UK is lower than it should be, which correlates with lower savings rates and investments, leading to poorer long-term outcomes. Targeted Support offers a way to engage consumers earlier, build confidence, and help them feel in control of their financial lives. Done well, this is finance at its most useful.

Of course, the societal case is only part of the story. The commercial logic is equally compelling.

Targeted support represents an additional service layer, allowing firms to reach customers they have historically struggled to serve economically. In many cases, it can act as a natural feeder into more complex products or advice - where appropriate, and when genuinely needed.

Take financial advice, for example. It follows that, when the financial circumstances of those receiving Targeted Support become more complex or they have more money, they are more likely to seek advice from a firm that is already familiar to them and that they already trust. Rather than losing those with less cash to invest today, they are kept within the brand ecosystem, generating modest revenue while remaining primed for higher-margin advice later down the line. This approach of cultivation increases the client lifetime value, not erodes it.

Fundamentally, offering targeted support means your existing customer relationships become higher-value ones. It creates structured, compliant moments to engage customers, surface needs, and, where suitable, present solutions. It also aligns with Consumer Duty, turning what has been described as burdensome regulation into something that is commercially attractive.

Finally, it's important not to forget about brand positioning. Those who choose to offer targeted support will be seen as helpful firms that care about the financial wellbeing of adults in the UK.

By offering targeted support, they are helping customers to make better decisions while being aligned with regulators and public policy objectives. Over time, this is likely to foster higher engagement, stronger brand trust and better retention. For firms with the scale and capital to support such a service, adopting it is a no-brainer. There's no sense in dragging our feet; firms must have the conviction to move now and help to define the market and set consumer expectations.

Targeted support's success depends upon firm involvement. If banks, platforms, pension providers, and large advice firms choose to sit on the sidelines, the regime risks becoming a well-intentioned reform that never reaches its full potential. This is a golden opportunity to properly address the advice gap and reach millions of underserved customers. Let's not let it go to waste.

This is a chance to define a new market, not merely comply with new rules. The prize is substantial: a meaningful reduction in the advice gap and better financial outcomes for millions.

Opportunities like this do not come along often. Being careful is sensible, doing nothing is not.

This article first appeared in Professional Adviser.