There has been a growing need for financial advice in the UK since the introduction of pension freedoms in 2015, but the rapid decline in the number of advisers is creating a damaging gap.
In August 2019, service provider Octopus Investments surveyed 205 IFAs and found 58% will exit the sector within the next decade.
This is equivalent to more than 15,000 financial advisers leaving the profession, out of the roughly 26,677 who currently work in the intermediary space.
One firm is calling on the advice industry to tackle the “collective challenge” that it faces.
International Adviser spoke to David Inglesfield, chief executive of the newly formed IFA group Independent Wealth Planners (IWP), to discuss the problems the industry faces.
Growing demand
Inglesfield said that the “sector is booming” as ageing population, later retirement, pensions freedoms and multiple workplace pots mean financial advice has become a necessity for UK citizens.
He said: “I think we just took the first stage of evolution of the financial planning industry.
“It’s obvious that the biggest and the best is yet to come because the demand is growing. The irony is that there’s a real shortage [of advisers] and people don’t know where to find them.”
Unknown industry
The talent gap is continuing to grow and one of the main reasons is the lack of knowledge from people outside of the industry about becoming an IFA.
Inglesfield added: “We all have this collective challenge that the industry faces.
“Other than people’s sons and daughters, there are no youngsters going into the sector.
“Why is that? Because it has zero profile.
“The industry has a massive job to raise the profile. But if you look on the flip side, what we’ve got here is a fantastic opportunity that nobody’s heard of before.”
He also said that one of the ironies is that being an IFA is an “absolutely brilliant career”, due to its “great job security, interesting mix of heavy-duty technical knowledge and great people skills”, as well as the pay and “flexibility”.
Solution
Despite only launching in November, IWP believes it can provide a good solution.
“This year we are planning to start doing certain academy-based recruitment and development,” Inglesfield said.
“We can train people up, get them to do the Chartered Institute Insurance (CII) exams over a couple of years and they can become productive.”
He did not state when this would be created.
But, Inglesfield said that it will likely be a programme, which the firm can put “some money behind recruiting people, getting them through the exams, getting them into the businesses, and then getting them the career path that makes them advisers”.
“It is more about swallowing the upfront cost of that, than it is about building a full-time project with teachers,” he said.
Easy access
Inglesfield added: “There’s a lot that we can do as an organisation to make it easier for people to come into the profession and become effective.
“The current generation have been self-made, nobody helped them to do it, it was done with brute force and determination, which is admirable, but it’s off putting.
“If you want to get people in, you have to build a path, so I think that’s what the academy is about.
“I think the academy is about creating that pathway and going out and finding some people and underwriting their entry into the sector.”
Second careeists
The assumption for getting people to join the sector is usually attract graduates or school leavers, but this is not always the case.
IA has written several stories on second careeists, such as ex-sports stars becoming advisers, as well as people returning to work after a period of leave.
“It’s partly about young people, but I also think there’s a big opportunity for mid-career people,” Inglesfield added.
“I’ve had some success with bringing in career changers, people coming back from parental leave and ex-forces.
“There are quite a lot of people particularly in the modern world for whom a mid-career or midlife career change is appropriate. This is a brilliant opportunity.”
