The UK government has launched a Savvy Squirrel advertising campaign to encourage more people to start investing. This initiative coincides with new City rules that allow certain banks and financial institutions to offer free extra help with investments and pensions.
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 bridge the gap between general guidance and information and financial advisers who charge a fee. 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.
How It Works
For example, if you have a large sum of several thousand pounds sitting in a high street bank savings account, you may see a message suggesting you consider investing some or all of this 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 advice but are based on what the companies “would recommend to those in similar circumstances”, making them better than generic guidance.
Goals and Impact
The FCA estimates that about 7 million adults in the UK have £10,000 or more in cash savings “who could be missing out on the benefits of investing”. Targeted support aims to help people make better-informed financial decisions. Customers who are not saving enough for retirement are also likely to be targeted. The regulator noted that many consumers avoid investing because they are unsure of their options or need more support. Currently, fewer than one in 10 people obtain regulated financial advice, while almost one in five investors turn to social media for help.
Early Adopters
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 and are supportive. Steven Levin, Quilter 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 has been exploring advice via an AI agent on its app, described 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
The FCA hopes targeted support will boost confidence in investing, a key goal for the government. Chancellor Rachel Reeves wants to create “more of a culture in the UK of retail investing, to earn better returns for savers”. Last month also saw the launch of Savvy Squirrel, a government-endorsed advertising campaign featuring a CGI squirrel to encourage cautious savers to invest. The Treasury notes that the UK has the lowest level of retail investment 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”. Stocks and shares have performed significantly better than cash savings in recent decades, though investing carries risk as values can go down as well as up.
The consumer body Which? advises that people should not assume an investment product offered by their bank is automatically the best for their needs.
