There are good reasons to be optimistic that Targeted Support will effectively serve those with enough assets or complexity to benefit from financial advice, but not enough to make traditional advice economically viable.
The hope is that predefined pathways, matched to investor segments based on clusters of personal characteristics and financial situations, will form a Goldilocks solution between generic guidance and bespoke planning.
In our previous post on the topic, we argued that common issues Targeted Support seeks to address—like insufficient investing or unsustainable pension drawdown—are as emotional as they are financial. To be effective, 'common characteristics' must include core behavioural traits alongside financial data, rather than relying solely on blunt demographic factors.
This article explores what advisers need to do to make the most of Targeted Support, regardless of final regulatory details.
Three Keys to Targeted Support Success
From a suitability perspective, successful implementation rests on three key components:
- Transmitting knowledge to consumers – The FCA's latest paper, CP25/17, highlights: '40% of consumers said that a lack of knowledge was their main barrier to investing.' However, as behavioural research consistently shows, merely presenting facts rarely changes behaviour. Under Consumer Duty rules, advisers must not only clearly disclose information but also make a genuine effort to ensure that communication is understood and effective in practice. This implicitly requires considering behavioural factors—sharing the right information in the right way for that consumer: at the right time, with the right tone, using the right level of detail.
- Helping consumers act on that knowledge – Sometimes, closing the advice gap means filling in knowledge gaps, helping clients see certain facts. More often, though, it means closing the intention-action gap, helping clients see themselves in the picture painted by those facts. The success of Targeted Support relies on consumers feeling a genuine fit via the ‘people like me’ effect. This can work well, but only if clients see themselves reflected in attitudinal profiles rather than blunt demographic categories like '65 to 74-year-olds with £100,000-£250,000 pension pots'.
- Evidencing the decision-making process – Because the regulations are necessarily non-prescriptive, there’s no simple checklist to prove a match is adequately well-made. Suitability—including Targeted Support—is judged not merely by documenting assessments or clear disclosures, but by evidencing reasonable grounds for believing the recommended path will lead to good outcomes. Just as superficially assessing risk tolerance can lead to trouble if it’s insufficiently robust or untethered from overall suitability, Targeted Support too will fail if good outcomes result from luck rather than judgement.
These three components should be seen as interdependent. Presenting information clearly is of course important, but focusing on clarity in isolation risks undermining the deeper goal: achieving genuine consumer understanding and emotional comfort. The confidence Targeted Support seeks to create isn’t achieved by simply culling surplus syllables or applying soothing pastel colours to a decision tree.
Suitability under Targeted Support must be an ongoing, dynamic alignment of characteristics, needs, situations, and solutions. As paragraph 2.49 of CP25/17 states:
'We propose that the common characteristics must be relevant to the common financial support need or objective of consumers in the common situation, and to the firm’s assessment of a suitable ready-made suggestion for the segment.'
In other words, suitability comes from the interaction between these components rather than isolated metrics. Needs, situations, and solutions evolve over time; what's suitable now may not remain so indefinitely.
How Oxford Risk can help
At Oxford Risk, we've developed tools to support each of these aspects.
Our behavioural suitability tools have analysed the financial personalities of thousands of investors globally. For years, we've explored how psychological differences affect investment comfort and suitability in common situations.
We can predict suitable solutions for given financial and psychological circumstances, recommending not only what to suggest but also when and how.
Sophisticated behavioural profiles surface hidden decision-making fragilities, highlighting opportunities for advisers to refine both portfolio choices and presentation.
This year, based on extensive research, we launched a set of ten investor personas representing common clusters of financial personality traits. These personas directly link to recommended actions in common scenarios—such as deploying surplus cash or navigating retirement options.
This provides firms with ready-made behavioural characteristics in an evidenced, continually updated framework.
We've also recently launched an online course: 'The Art of Behavioural Investing', designed to address the knowledge gap and give investors the tools to recognise and manage their own biases and psychological barriers.
What Counts as 'Common Characteristics' for Targeted Support?
Given the FCA’s emphasis on ‘common characteristics’, it’s important to clarify exactly what this term implies. CP25/17 provides no precise definition of 'common characteristics', nor is it likely to in the final rules. However, the intent is clear, particularly around vulnerable clients.
Paragraph 2.48 states:
'When designing consumer segments, firms must not only consider common characteristics to align a consumer with a segment (‘including characteristics’), but also common characteristics which would prevent a consumer from being aligned with a segment (‘excluding characteristics’).'
Paragraph 2.50 explains further:
'...excluding characteristics refer to characteristics which are likely to render a ready-made suggestion ineffective, inappropriate or unduly risky, and thereby unsuitable.'
This definition immediately points toward vulnerability characteristics—'red flag' elements like cognitive decline, very low knowledge, imbalanced risk capacity, or behavioural traits requiring additional oversight.
Our previous work on behavioural vulnerability underscores the importance of behavioural characteristics in assessing suitability.
The report uses the example of excluding those with significant health issues from solutions deemed suitable for a particular segment based on average life expectancy, thereby demonstrating the need to consider relevant demographic data. An equivalent behavioural example is Impulsivity, which significantly influences suitable pension drawdown rates—often as much or more than financial metrics traditionally emphasised.
As we argued previously:
'Just as it would be unthinkable to design Targeted Support without accounting for differences in financial characteristics, the same must apply to behavioural ones. Traits like composure, confidence, and impulsivity can substantially affect the right course of action for a consumer, often as much as their financial capacity or experience.'
Relevant common characteristics should therefore focus not on the quantity or historical ease of measurement, but their genuine impact. Demographic factors (such as age) often serve as weak proxies for behavioural traits like confidence or financial comfort.
The Continuum of Advice
Targeted Support suitability isn't fundamentally different from fully personalised suitability. The core process is the same; the detail differs. The ultimate goal remains the same: a good financial and emotional fit between investor and investment.
In specialist situations, ensuring a good fit requires multiple visits to a skilled tailor. In more common scenarios, it requires a solid grasp of your needs, a good-enough selection of standard sizes, and a reliable friend with a trustworthy eye to help you choose.
As the FCA are keen to point out, Targeted Support isn’t a new, standalone, service. The report is clear that it sits on a ‘continuum of support’ between ‘simplified and more comprehensive’ advice, and can act as a stepping stone in either direction as ‘needs and circumstances change’.
There’s therefore no need to invent anything new. The right tools for the job already exist—and at Oxford Risk, we’ve already built them.
