Project Summary

The financial advice gap refers to the limited demand for professional financial guidance, caused by consumers’ inability or unwillingness to afford such services (Financial Conduct Authority, FCA 2023). This gap is well-established and is known to negatively impact individual investors’ financial outcomes. On a broader scale, the absence of proper advice creates negative cascading impacts, weakening the financial market efficiency, particularly in critical areas like retirement savings, institutional investments, and the transfer of wealth between generations. 

This project addresses the financial advice gap by developing a “targeted support” system for financial decision-making, based on the “people like you” principle outlined in the FCA advice guidance boundary review (FCA, 2023). After suggesting a dynamic clustering technique for the customers, we set the goals of the portfolio optimisation based on multiple criteria, such as liquidity, targeted returns, investment horizon, ESG, and ethical considerations. We then implement an algorithm that identifies the best asset combination based on these criteria for each cluster of customers. We compute the algorithm performance for each time period of the investment horizon and compare with the benchmark models used in the industry. This tool will help consumers enhance their financial situation by addressing their unique characteristics and needs.