The UK’s Financial Conduct Authority (FCA) recently began approving the first solutions to come to market under its new targeted support framework for pensions and retail investments, intended to help bridge the UK’s long-standing advice gap.

But the scale of that gap is significant. 

According to the Financial Conduct Authority’s own figures, around 23 million adults – roughly half the UK population – are underserved by the markets for advice and guidance, with just 9% of adults receiving financial advice about their pensions or investments in the previous 12 months.

The need for better support is clear. But since much of the FCA’s work on targeted support began with the Advice Guidance Boundary Review in 2024, the market has undergone a fundamental shift.

AI has started to fill the advice gap 

The emergence of general-purpose AI has fundamentally changed how consumers make financial decisions. Research from Finder found that almost two-thirds (65%) of Gen Z and three-fifths (61%) of millennials in the UK already use AI tools for personal finance. 

Whether regulated firms like it or not, consumers are increasingly comfortable turning to AI to help answer financial questions, compare options and sense-check decisions.

If firms are to develop targeted support journeys, they not only need to stay within the FCA’s regulatory framework, they need to build propositions that remain relevant in a world where consumers can access both regulated and unregulated sources of financial advice that can provide a more holistic view of their financial lives.

While we are beginning to see early solutions emerge, the conversations we’ve been having with clients paint an interesting picture. Many firms understand the opportunity, but are hesitant to commit to a complex investment in a rapidly moving market. 

Questions we hear repeatedly include:

  • Is it worth investing in targeted support? 
  • What form should targeted support take and where does it fit into our existing customer journeys?
  • Do we need to build this ourselves or is there a role for partnerships and white-labelled solutions?
  • How do we ensure we build a solution that doesn’t cross into advice?
  • Is our existing customer segmentation fit for purpose and how do we decide on the right segment sizes?
  • How do we ensure any investment in targeted support we make today remains relevant in three to five years’ time?

Broadly, firms recognise that customer decision-making has changed rapidly, and continues to do so. There is also nervousness that they are focusing on designing targeted support solutions in a market where customer decision-making behaviour has already moved on.

"The most important questions firms should try to answer are not regulatory questions but customer questions."

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It all starts with the customer

The first thing firms must do is build a deep understanding of how customers research, evaluate, and make financial decisions today, and how that process is evolving. 

Increasingly, consumers are combining traditional sources of information with AI-powered tools before engaging directly with a provider. That means the most important questions firms should try to answer are not regulatory questions but customer questions.

For example:

  • At what stage of the journey are they turning to AI?
  • What types of financial questions are they comfortable asking an AI assistant?
  • Where do they still seek reassurance from a regulated institution?
  • Where do they expect human interaction in the journey?
  • What information or support do they feel they cannot get elsewhere?
  • Where in the decision-making process would targeted support add value?

Understanding these behaviours will help firms identify where targeted support could sit within the customer journey and where there are opportunities to differentiate through trust, expertise or access to customer data.

It will also help answer a more difficult question: whether targeted support is still relevant given consumers’ growing use of AI-powered financial guidance and advice.

Assess where the market is heading, not just where it is 

While consumers are increasingly using AI to fill the advice gap, the challenge is that the AI is often not provided with enough context to be useful, and this is putting customers at risk. 

As Primer CEO Gab Laroo said in Fintech Insider episode 1066 “AI becomes relevant when you have context. If you don’t have full context, how can you actually recommend things which are going to yield positive outcomes?”

We are already starting to see this contextual capability coming into the market. 

In the US, OpenAI has begun expanding its financial services capabilities through partnerships that enable AI systems to access richer financial data and provide more contextual support. While these capabilities remain in their early stages, they point towards a future where AI can develop a more holistic understanding of an individual’s financial circumstances and deliver recommendations tailored to that context.

As Colin Payne, Head of Innovation at the FCA, recently noted on Fintech Insider, OpenAI’s integration with Plaid is “an indication of where things may travel to” in the UK.

The FCA has also signalled support for this direction of travel through its Open Finance roadmap. If successful, the combination of richer financial data, Open Finance infrastructure and AI-enabled support could help firms move beyond generic financial education towards more personalised interventions that improve financial decision-making at scale, while maintaining the consumer protections provided by regulatory guardrails.

While Open Finance will be a powerful enabler of innovation, and it is encouraging that the regulator is supportive of this direction of travel, it also raises important questions about the future role of targeted support within the broader advice ecosystem.

The opportunity is bigger than targeted support

The advice gap remains one of the biggest challenges facing UK financial services, and targeted support has the potential to play a substantial role in addressing it.

The question for firms is not simply how to deliver targeted support, but rather what is their strategy for customer support, guidance and advice and what do they need to build that will truly help customers make better financial decisions throughout their financial lives.

The firms that create the most value will not be those that purely build solutions based on today's customer needs, but those that define a strategy and build solutions designed with evolving technology, regulation, and customer behaviours at the forefront so that investments in targeted support deliver value today and into the future. 

Before committing significant capital to development, 11:FS help our clients to stress-test this opportunity:

1. Customer JTBD Audit: Mapping the specific customer "Jobs to be Done" to  find the highest priority unmet needs which targeted support could serve

2. Decision Mapping: Reveal how the customer decision-making journey has evolved and the direction it is headed

3. Define Strategy: Define a strategy which puts targeted support in the context of a digital future

We help financial institutions create future growth engines.

At 11:FS, we don't just design digital propositions; we help you navigate the complexity of the growth cycle - from validating unmet customer needs to launching scalable future ready propositions. 

If you are struggling to define whether targeted support presents a genuine product opportunity for your firm, let’s talk.