Targeted support: closing the advice gap with optimism – and caution

The FCA’s new targeted support framework has been widely welcomed as a potential solution to the “advice gap” – helping more people access useful support with pensions and investments. If implemented well, it could make a real difference to how people engage with their financial futures.

But the key question is whether it will work in practice – particularly for people experiencing mental health problems or other vulnerabilities that make engaging with financial decisions more difficult.

Targeted support allows firms to provide suggestions to groups of customers without offering fully personalised advice.

But success will depend not just on access, but on whether people can understand, trust and act on the support they receive.

Behavioural research on saving highlights the role of optimism in shaping financial decisions. One study, “A glass half full of money: Dispositional optimism and saving”, found that optimism about the future is a strong predictor of whether people save – even when controlling for income and other factors.

People who feel more hopeful about their future are more likely to plan ahead and engage in long-term financial decision-making. This has clear implications for targeted support.

Designing prompts and guidance that build confidence and a sense of future possibility could help encourage more people to engage with saving and investment decisions.

However, these insights do not apply evenly to everyone.

Around one in four people in the UK experience a mental health problem each year, and symptoms can directly affect how people think about the future and engage with financial decisions.

Research from Money and Mental Health shows this can reduce cognitive capacity, make it harder to process complex information, and increase anxiety around financial decisions. People may disengage entirely or make decisions under pressure that they later regret.

For example, people experiencing depression or anxiety may be more affected by pessimism bias – expecting negative outcomes or struggling to see a positive future.

As a result, the same “nudge” may feel overwhelming, irrelevant or pressurising, depending on someone’s mental state.

This does not mean targeted support cannot work. But it must be designed with a clear understanding of how mental health affects financial behaviour. This includes recognising that people’s mental bandwidth is often limited.

Support that presents multiple actions or complex options can quickly become unmanageable. People may benefit from step-based guidance, clear prioritisation, and the ability to pause and return when ready.

There is also a need for “no wrong door” systems, where people can move easily between guidance, targeted support and independent advice.

In debt advice, for example, advisers often find themselves navigating very close to the boundary of regulated financial advice – particularly where debt intersects with pensions. 

Decisions about whether to draw down pension savings to repay debts are complex and high-stakes.

Guidance services can explain options, but not recommend what someone should do. This can leave people – particularly those in vulnerable circumstances – without clear, actionable support.

Targeted support has the potential to help fill this gap – but only if it is designed to work alongside, not instead of, independent advice and wider support services.

As providers develop targeted support, there is a need to involve people with lived experience of mental health problems in design.

This includes testing communications, understanding which prompts feel supportive, and identifying where people disengage.

It also means ensuring targeted support is not just accessible, but safe to act on – with clear explanations, appropriate pacing and safeguards.

Its success should not be measured by how many people act on a prompt, or how quickly. 

Instead, the test should be whether people:

• understand the support they are receiving
• feel confident in their decisions
• and are supported to make choices that improve both their financial and mental wellbeing.

The Consumer Duty has a key role in ensuring firms monitor outcomes, identify harm, and adapt where needed.

But that will only happen if it is designed for real lives – not ideal ones.