One of the biggest struggles for the financial advice sector has been its inability to solve the talent crisis.
The industry is continuously losing many advisers as the ageing IFAs look to exit the industry or retire.
Recently, strategy consultants Opinium revealed that three-quarters (76%) of IFAs plan to retire in the next decade.
Around a third (31%) expect to retire in the next two-to-five years and 30% plan to stop work in the next five-to-10 years, the research found.
Also, 76% said there are not enough advisers entering the industry to cope with future demand, while 60% believe there are not enough IFAs joining the industry to manage workloads.
International Adviser spoke with Progeny, GSB, Kingswood, Blacktower, Openwork and Lumin Wealth to discuss how the advice industry can solve the talent crisis problem?
How big is the problem?
Dean Kemble, chief commercial officer at GSB, said: “The financial advice industry is facing a concerning talent gap, with a significant proportion of financial advisers being over the age of 50 and a smaller proportion being under the age of 35.
“This dynamic could result in a shortage of advisers in the coming years. This imbalance suggests that the industry may struggle to fill the gap in the coming years, particularly if younger professionals are not attracted to the field.”
Andrew Fry, head of partnership recruitment at The Openwork Partnership, said: “There are currently too few positions available that give newly qualified advisers both access to clients and financial support to be able to apply their newfound knowledge in a safe environment (for them and their clients) without the need to spend most of their time ‘prospecting’ and being under pressure to write business to pay their bills.
“As an industry, we have come a long way since the 80’s in terms of standards, regulation, and qualifications, but when it comes to how we support advisers in the early years of their careers we haven’t travelled far from when I joined direct sales in 1987, where I was ‘commission only’ and my best friend was the yellow pages. There is still too much focus on the outdated model of self-employed new advisers having to find their own clients before they can advise them – financial planning and marketing are two different disciplines.”
John Westwood, group chairman at Blacktower, added: “Due to the complex nature of the financial services industry and the unique set of qualifications and accreditations required to become an adviser, it can be somewhat challenging to fill open positions, especially after the industry shift as a result of covid.
“Technological and digital developments are transforming the industry rapidly, but at Blacktower, we strongly believe that there is no substitution for personalised, face-to-face service when it comes to providing bespoke financial advice. This means that adviser retention and upskilling are key, as is offering education and career support to the next generation of advisers.”
Fix the issue
The financial advice industry may not be doing the best job in solving the talent gap problem now, but there are a number of different ways this can be overturned.
Ian Browne, chief of advisory services at Progeny, said: “An ongoing challenge is that financial services isn’t a visible profession for most school age children and so young people across society don’t grow up understanding what our industry does, nor its value. The more recent addition of the T Level in Finance is a step in the right direction, but a lot more needs to be done at the grassroots level to help address the ongoing talent gap and increase diversity and inclusion in our sector.
“In the absence of government-led initiatives, responsibility will largely fall on the industry itself to build mutually beneficial relationships with schools and colleges and universities, as well as their local communities.
“In tandem, our industry also needs to open the doors to second careerists. The military has long been an established route into a financial advice career but teaching, nursing and other professional services are all fertile recruitment grounds in my view.
“Attracting people is of course just one side of the coin and firms equally need to ensure they have the structures in place for new recruits to gain the qualifications, skills and insight they’ll need to become the professionals of tomorrow. Academies are hugely important here, as is the opportunity for new entrants to the industry to work closely and be mentored by more senior team members.”
Steve Bowyer, talent acquisition manager at Kingswood Group, said: At Kingswood Group, we are looking at all the ways possible to help our clients by having a mix of emerging talent and experienced advisers.
“For our emerging talent, we have in place career progression opportunities in trainee adviser positions and future talent programmes which we are continually reviewing. These offer those with either no wealth planning experience, or those who want to develop into paraplanning/wealth planning, a route to be able to do so.
“Our trainee advisers tend to be a younger demographic which certainly helps connect to a younger client demographic, which in turn helps close the advice gap.”
Diversity
The initiatives in the advice sector will not be effective if the industry does try to tackle the diversity problem.
In December 2022, campaign group Reboot found racial discrimination “is still rife” in the financial services sector.
The sector does not portray the most diverse image – and it does not stand a chance of tackling the overall advice gap if barriers exist for many of the population to enter the profession.
According to a 2020 report by Cerulli Associates, just 9% of financial advisers in the US are people of colour. Similarly, women make up just 23% of the industry’s workforce.
But some firms are looking to help change these damaging statistics. Wealth management and financial advice trade body Pimfa launched its ‘make it’ campaign to encourage more people to join the industry.
Slow progress
GSB’s Kemble said: “The industry has historically been dominated by white men. While efforts have been made to increase diversity in recent years, progress has been slow.
“Barriers such as class, race and gender, can be broken down by actively working to increase diversity and inclusivity in the field. This can involve implementing programmes that support the recruitment and retention of diverse talent, providing mentorship and professional development opportunities to underrepresented groups, and creating a culture that values and celebrates diversity.
“This could also involve working with educational institutions to promote financial advice as a career option and highlighting the benefits of working in the industry, such as the potential for a rewarding career and the ability to make a positive impact on clients’ lives.”
Joe Fisher, financial planner and financial planning manager at Lumin Wealth, added: “Financial planning needs aren’t solely exclusive to the wealthy, and they don’t discriminate by race or by gender. To break down these barriers it is important for financial advice to be accessible to all demographics.
“Confidence in financial planning starts with the adviser, so it’s essential that the industry becomes accessible to new advisers who hail from varied demographics. At Lumin, we believe that this can be done through our academy, and by engaging in local societies and communities, both as financial planning partners, and as friends and supporters.”
