Several providers have publicly expressed interest in offering enhanced guidance, bridging the divide with technology-driven approaches that provide the ability to assess an investor’s risk profile and suggest a risk-aligned solution without offering full-blown advice. Under the new, more nimble and flexible post-Brexit regime, perhaps the regulator may make space for such third-way solutions?
Target market concept
In the meantime, we have Prod, the FCA’s Product Intervention and Product Governance Sourcebook, which puts the concept of a ‘target market’ of end clients at the heart of governance.
My reading is that this creates space for advisers to split their clients into groups of people who are similar to each other. For example, they can take everyone that is, say, between 50 and 70 years old, yet to retire, with a risk profile between three and seven and a medium to strong preference for sustainability, call them ‘target market A’ and recommend the same portfolio.
This does necessarily ignore some of the small differences that make us individuals. But those differences do not always have huge implications for the end portfolio.
Of course, some client circumstances will always require more specialised and tailored advice. But for many clients, a target market approach will be quicker, cheaper and more efficient than a highly personalised approach, and similarly effective. And for advice businesses it will provide an opportunity to further enhance productivity in a hybrid world.
In the right circumstances – in the Stade de France, in working life, when giving financial advice – being part of a group, rather than asserting pure individuality, might be the most productive option.
Ben Goss is chief executive of Dynamic Planner
