Pension savers back City watchdog's plan for finance firms to give them 'targeted' help
Pension savers think the Financial Conduct Authority's proposals offer the opportunity for them to receive more relevant help with their financial decisions, according to a consumer panel conducted by pension provider Standard Life.
It said many welcomed its ability to filter out information that isn't relevant to their circumstances.
Even though the panel was aware targeted support would not provide personalised recommendations, the response was still overwhelmingly positive.
However, those with larger pension pots or more complex financial situations were less likely to see targeted support as a relevant tool for them.
Consumers also said targeted support has the potential to reduce feelings of anxiety and a sense of being overwhelmed that they feel when making complex financial decisions, Standard Life said.
Standard Life research form 2024 indicates that as many as 41 per cent of those aged between 45 and 60 were nervous about financial decisions that they would have to make in the coming years.
Cath Sermon, head of public engagement and campaigns at Standard Life's Centre for the Future of Retirement, said: 'Our study shows that even people with a good grasp of other financial areas of their lives, such as mortgages or Isas, often feel confused about pensions.
'This can lead people to feel anxious, overwhelmed and worried about the risks of making uninformed decisions.
'Savers like the clarity, the ability to whittle down the options to more relevant information for themselves and to be able to review that, but also the emotional role that targeted sport could play.
'The panel came back to the sense a lot of them have of not being aware of the decisions they're going to need to take, therefore not really feeling prepared for that decision making and thinking of the risks involved with getting it wrong.'
Fewer than nine per cent of people received financial advice in 2024, FCA data shows, but as many as 17 per cent used the Government-backed MoneyHelper service, indicating that free guidance in the form of targeted support could benefit many of those who don't choose to take regulated advice.
Firms will be able to charge for targeted support, but the FCA said its research shows that a majority of firms will not do so.
Last week, the FCA launched a consultation on the proposed targeted support service, calling for financial firms and consumer groups to weigh in, with the Government looking to roll out targeted support from early next year.
The consultation, open until 29 August, will allow firms to have their say on the FCA's updated proposals for targeted support.
Sarah Pritchard, deputy chief executive of the FCA, said: 'These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike.'
Targeted support is intended to allow financial firms to offer suggestions to customers based on what the FCA calls 'reasonable assumptions' about their financial circumstances.
The new system will not be classed as regulated financial advice, and will instead take the form of generic suggestions on what consumers should do with their money, based on what others with similar finances do with their money.
This could include suggesting to those who hold large sums of cash that they should move some of their funds into stocks and shares.
However, what form this guidance will eventually take remains to be seen.
A key takeaway from Standard Life's panel was that online tools alone would not provide enough reassurance or clarity to savers, with many saying they would like the option to speak to someone.
Sermon told This is Money: 'one of our recommendations to providers would be to think about providing an ability for people to speak to someone.
'Many on the panel said they would like to know that there's an ability to have human interaction as a backup or reassurance, none of them were expecting that to take them any further than targeted support.'
She added: 'It's really just having the ability to sense check what suggestions they've had from online tools.'
There are also concerns from savers that they can't trust that the suggestions made by providers have the customer's interests as a priority, rather than their own.
Standard Life said: 'They were most receptive to targeted support when they see it as giving them relevant information and choice, or protecting them from harm, rather than selling anything.'
The solution, Sermon says, is to create a set of voluntary best practice principles that companies can share as targeted support develops.
'We don't want it to become a straitjacket because that could limit the evolution of [targeted support] something's written very tightly in regulation from day one,' she said.
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