Targeted Support: The Pitfalls of Prioritising Investment Sales Over Personal Empowerment

The Financial Conduct Authority (FCA) recently acknowledged a harsh truth: their new “targeted support” measures won’t deliver “perfect advice” for everyone. The initiative aims to encourage more people to invest and take on long-term financial risks. But as we dig deeper, it becomes clear that this approach prioritises financial capital over human capital, raising significant concerns about accessibility, equity, and the true purpose of financial planning.

The government’s push for the FCA to open the floodgates to long-term investment products for the mass market—while simultaneously placing growth sales targets on the regulator—creates a conflict of interest. Instead of fostering financial well-being for all, this strategy seems to cater to the interests of City lobbyists and perpetuate outdated “trickle-down” economic ideologies. Why is the focus on selling products, rather than empowering individuals with education and accessible tools to manage their financial futures?

Financial Planning: More Than Just Investments

The overemphasis on financial capital as the be-all and end-all in financial planning is deeply flawed. Life is multifaceted, and financial security is just one piece of the puzzle. Strategies to improve human capital—such as combating ageism in the workplace or providing lifelong learning opportunities—are ignored. These initiatives would allow people to earn for longer and enhance their overall financial resilience.

Education and empowerment are the real keys to unlocking better outcomes for the masses. In today’s commoditised investment market, self-directed platforms already provide affordable and accessible options. Why, then, are we funnelling resources into selling financial products rather than creating a framework that empowers individuals to make informed decisions?

A Conflict of Interest

By assigning a growth sales target to the FCA, the Treasury Committee risks undermining the regulator’s primary role: protecting consumers. When the focus shifts from impartial regulation to achieving sales-driven goals, it becomes harder to trust that consumer interests are being prioritised. The FCA’s admission that targeted support measures won’t always optimise for personal circumstances underscores this concern.

This approach also raises questions about equity. Targeted support, by design, suggests that “people like you” might benefit from a certain investment, but it fails to consider unique individual circumstances. While this may reduce costs, it sacrifices personalisation and can lead to suboptimal outcomes for many. Is this really the best we can offer?

The Risk of Financial Capital-Driven Economics

Focusing solely on financial capital while ignoring human capital development creates significant risks for individuals and society. Human capital—our skills, knowledge, and ability to earn—remains bond-like in nature, meaning that earnings growth stays relatively low throughout a working life. This low earnings growth translates into limited disposable income, leaving little room for savings. Trying to force financial capital products onto a population with constrained disposable incomes risks creating immediate hardship. Simply put, you can’t take money from those who already have empty pockets.

Furthermore, pension rules restrict access to these investments until retirement. While this may sound like a way to secure long-term savings, it does nothing to address financial resilience during a working life. Worse still, these pension pots are vulnerable. Divorce settlements, scams, pension scandals, and scheme insolvency can erode or even wipe out these assets. The result? A lifetime of sacrificing discretionary income and lifestyle expenses for the promise of security in retirement that may never materialise.

The risks don’t end there. Small pension pots can deprive individuals of means-tested benefits in later life, while larger pots are often subject to punitive decumulation taxes, far outweighing the tax concessions given during accumulation. Recent government decisions to include inheritable pensions in estates for inheritance tax purposes further complicate the picture, creating significant financial burdens.

It seems the City has painted a picture to the government that blames the public for their lack of engagement with financial products. According to this narrative, people are lazy, uninformed, or na?ve and must be forced to dial up risk on their life savings. But could it be that the public is actually well-informed and deeply distrustful of an industry rife with conflicts of interest? This mistrust is hardly surprising, given the scandals, mismanagement, and self-serving practices that have plagued the sector for decades. Building trust through transparency, education, and consumer empowerment is the only way to bridge this divide, not by forcing financial products on an already sceptical population.

Financial Goals Must Reflect Individual Lives

Imagine an employee diligently saving into a pension scheme, unaware that they are locking away funds they might desperately need for other ambitions. Perhaps this individual is an aspiring entrepreneur, disillusioned with the daily grind and yearning to start their own business. For them, accessible capital is essential—but pension rules mean they can’t touch these savings until at least age 57. This one-size-fits-all approach doesn’t account for the unique dreams and challenges people face, leaving them trapped in systems that don’t align with their goals.

The Better Path: Education and Empowerment

The solution lies not in selling more financial products but in providing people with the knowledge and tools to navigate their financial lives confidently.

1. Financial Literacy: By investing in education, we can empower individuals to make informed decisions about saving, investing, and planning for the future.
2. Human Capital Strategies: Policies to address ageism and create lifelong learning opportunities would enable more people to continue earning and saving for longer.
3. Accessible Tools: Expanding access to self-directed platforms and generic advice can fill the advice gap without imposing unnecessary costs on consumers.

A Call for Change

It’s time for the Treasury Committee and the FCA to rethink their approach. Financial planning should prioritise people over products, focusing on education, empowerment, and equity. Let’s move away from a system driven by sales targets and towards one that genuinely supports individuals in achieving financial well-being.

By challenging the status quo and advocating for a more balanced approach, we can create a financial ecosystem that truly serves the needs of the many, not just the interests of the few. Let’s champion a future where financial planning is accessible, transparent, and aligned with the broader goal of improving lives.