The UK government has launched a Savvy Squirrel advertising campaign to encourage more people to start investing. New City rules mean certain banks and financial institutions can now offer free extra help with investments and pensions, aiming to bridge a gap between general guidance and paid financial advice.
What Is Targeted Support?
Last month marked the launch of "targeted support," a new regulated service that permits companies to suggest investment and pension products to customers that might provide better returns. The service aims to help people make better-informed financial decisions without the cost of individual advice.
How It Works
Companies, including banks, building societies, and investment platforms, must be authorized by the Financial Conduct Authority (FCA). Most advice is expected to be free, with commission payments banned. For example, if you have several thousand pounds in a high street bank savings account, you might see a message suggesting you consider investing some or all of that money, with a link to the bank's investment options such as a stocks and shares ISA or a pension plan.
These suggestions are not individually tailored but are based on what companies "would recommend to those in similar circumstances," offering a more personalized approach than generic guidance.
Who Benefits?
The FCA estimates about 7 million adults in the UK have £10,000 or more in cash savings and could be missing out on investing benefits. Customers not saving enough for retirement may also be targeted. The regulator notes that many people avoid investing due to uncertainty, with fewer than one in 10 obtaining regulated financial advice, while almost one in five turn to social media for help.
First Participants
Wealth manager Quilter and insurance group Royal London are among the first to gain permission to offer the service. Some companies, like Barclays, plan to launch it soon. Steven Levin, Quilter's chief executive, said: "Deciding whether and how to invest can be a daunting experience for people, leading to a dangerous inertia. We want to offer a simple and accessible way to get started."
Scottish Widows is exploring the use of an AI agent on its app to provide advice, describing it as working "like a satnav, by helping people understand their options and choose a route that makes sense for them, based on others on a similar journey."
Government Push for Retail Investing
Chancellor Rachel Reeves wants to create "more of a culture in the UK of retail investing, to earn better returns for savers." The Treasury notes the UK has the lowest retail investment level among G7 countries, meaning savers "are not getting the best bang for their buck" and UK businesses are "starved of an important source of capital."
According to the government, stocks and shares have performed significantly better than cash savings accounts in recent decades, though investing carries risk as values can go down as well as up. The consumer body Which? warns that people should not assume an investment product offered by their bank is automatically the best for their needs.
