There is no quick fix for changing attitudes to investing.
The UK has become a nation of savers with a general lack of confidence in the upside of investing.
However, we have arrived at a pivotal moment whereby the government, regulators and industry are all making a co-ordinated and concerted effort to reverse this trend.
This is a golden opportunity to make advice accessible and appropriate for a wider section of society
Still, the challenge is a big one. Earlier this year KPMG UK conducted consumer research into the likely impact of reducing cash Isa limits on attitudes towards investing.
The results were not too hopeful.
We found that 87 per cent of people would put any money over and above the new cash Isa limit into less tax efficient savings rather than into a stocks-and-shares Isa.
Those aged 55 to 64 are the least likely to divert savings into stocks and shares (just 10 per cent said they would) followed by the over-65s (13 per cent) and then 18 to 24-year-olds (20 per cent).
The age group most likely to invest was 25 to 34 years olds, with just over half saying that they would invest anything more than £12,000 that would have historically gone into a cash Isa.
The UK requires a mindset shift. We need a meaningful push towards greater financial education to give people the confidence to put their hard-earned savings into products with a bit of risk, in return for potentially greater reward.
Targeted support gives the industry a great opportunity to create that mindset shift.
If done well, targeted support can help a much wider cross section of society than the existing financial advice landscape.
Implementation will be technical but there is likely to be a significant first-mover advantage.
Firms such as banks, platforms, advisers and wealth managers will be able to proactively target investors with specific investment products or suggestions.
These suggestions will be based on categorising consumers into segments determined with reference to factors such as a customer’s demographic characteristics, current financial position and attitude to risk.
With the near-final rules now published, all relevant firms can consider how targeted support can complement their existing services. Work on this should start now if firms wish to apply to the Financial Conduct Authority for authorisation to deliver targeted support when the gateway opens in March 2026.
Preparations involve working through the fundamental building blocks of the regime and applying strategic thinking as to how new potential use cases could fit into their strategy, business model and purpose.
Crucially, conduct considerations and the consumer duty must be built in from the outset. This should be reflected in an intuitive and consumer-friendly customer journey.
There is also a variety of risks that firms will need to address and consider — for example, what putting the consumer in a better position means in practice will require careful judgment.
Additional challenges are likely to relate to deciding on which consumer data should be considered when targeting them, the appropriate level of granularity at which to define consumer segments and ensuring all relevant existing FCA rules are incorporated in targeted support journeys
As ever, the rollout of targeted support needs to align with the wider regulatory agenda.
There is currently an unprecedented focus on boosting retail investment and close alignment across the industry, regulator and government.
This has already resulted in a significant package of measures, including final FCA rules to amend disclosures for UK retail products, proposals to update the client categorisation regime and a discussion paper on broadening access to retail investments.
Further measures are due in the new year, most notably an FCA consultation on a simplified advice regime.
This is a golden opportunity to make advice accessible and appropriate for a wider section of society. It is down to firms to work through the details and make it a success.
Jane Wilson is the targeted support lead at KPMG UK