The financial advice industry is at a crucial point with a large number of advisers either retiring or becoming disenfranchised with the profession.
The overall figure of those exiting continues to outweigh the number of individuals entering the sector to become advisers.
Firms are starting to fix the problem with the launch of adviser training schemes, but there is still a lack of knowledge about the job outside of the industry.
Sophia Bhatti, partner at Hoxton Capital Management, told International Adviser: “The majority of individuals do not understand the full scope of a financial adviser’s role, our industry is not understood, and I believe we need to change this.
“The younger generation, from those I have had a conversation with, do not understand fully what a financial adviser does. Our roles cannot be simply defined due to the wide scope of what we do. I believe if we educated our younger generation, they would be interested in the industry and the careers.
“It is also a great way of learning about money in a way that isn’t taught at school. I want to help more people understand what an amazing industry it is, for those needing financial adviser, as well as those who aspire to have career in it.
“A lot of people compare us to tax advisers or accountants; financial advice is very different. People really need financial advisers and that’s another problem that’s going on now.
“There are fewer people within the industry and even fewer people coming into the industry, there is a real need to talented financial advisers. It is a very fulfilling job and career and it’s unfortunate that people just don’t know what exactly financial advisers do.”
Have professional bodies done enough?
Enticing people to the sector sounds easy. But it has not been perfected yet.
The Chartered Insurance Institute (CII) and the Chartered Institute for Securities and Investment (CISI) have introduced initiatives, but things haven’t changed much.
Bhatti said: “I think they have tried and are trying from my understanding, but I do feel they could do a lot more. When I was at university, a lot of professional accounting bodies used to come to my campus to attract graduates, but I never recall seeing CII or CISI, and I don’t believe that’s changed.
“I believe if they made themselves more apparent and present, they would attract more people into the industry. Financial institutions need to get more involved with universities, that’s where you’re going to attract the younger generation, it is there that most graduates decide or start to think about where they want their career to take them.
“If they are doing a business degree or an accounting degree, they don’t necessarily know what they’re going to be doing after they’ve graduated. That’s the time to really attract them to the industry. There’s a lot that can be done. I think there’s major gaps.”
Fill the talent pool
In a bid to help fight the drought of financial advisers, Hoxton Capital Management launched its graduate programme in September 2021.
The Hoxton Academy will be held in its Dubai hub and will provide a two-year financial planning training course for 10 selected graduates.
Throughout the two years, trainees will gain two level 4 industry recognised accreditations in financial planning. They will be supported by a Hoxton Academy team, as well as work closely with the firm’s senior advisers.
Bhatti said: “From my point of view, we didn’t want another training scheme that was only a few weeks long, or to try to attract lots of people. I wanted to open an academy that has structure and would put us out there that competes with other graduate schemes, like the Big Four accounting firms.
“What we decided was, in the first year, everyone would complete their UK level 4 diploma qualification, this is the minimum qualification needed in all regulated countries and at Hoxton, our minimum.
“For our candidates’ second year, we will then work with them to understand if there is a specific country they would like to continue their career in, such as, if they are going to be placed in the US, they will start to look at their series 65 exams. Alternatively, they might return to the UK and will look at their chartered exam, similarly with Australia.
“We are following the UK pathway into financial advisory as I believe it is the better route. If there is a specialist area we want to focus on, we will review the pathway, however at the moment we’ll follow the UK chartered qualifications after diploma because I think that would be the best way forward.”
Types of graduates
IA has consistently written about the different career paths that advisers can take to enter the industry.
There are career returners, graduates and second careerists, but who will be allowed to join the Hoxton scheme?
“We are already getting applicants who have maybe graduated a little while ago, started a career or a job and want to make a change,” Bhatti said. “We are open to look at these applicants.
“One of the things that we are quite specific on is having the right skill sets, attitude, and personality. All of these attributes make them a good adviser. You could have a fantastic degree on paper but not able to communicate well.”
Bhatti added that the firm is “ideally” looking for people who have got a finance- or business-related degree “because they’ve got the background already”.
“If someone is coming from something completely different, it’s tough to get your head around it. But if you’ve already got business, finance or anything along those lines, it’s much easier.”
New clients?
As much as trying to bolster the number of advisers in the sector is necessary, it wouldn’t be crazy to suggest that firms set up graduate or training schemes as a long-term ambition of obtaining younger clients.
But Bhatti said: “I don’t think we’ve looked at it from that point of view, although it is a good idea. I think my vision with this was more around the lines of getting the younger generation into the industry more than looking at who they’re going to be dealing with.
“It was about making it attractive, putting something out there that will bring in more young people, because the numbers are declining. There are schemes out there, but there’s not many at a global level that are doing what we’re doing from my point of view.
“I think this will hopefully start to attract more and more people back into the industry, especially the younger generation, because it’s such a fantastic career.
“I don’t know why we’re not getting the numbers. As part of this scheme, we will start to roll out initiatives with UK universities to further increase the visibility of the industry, which is something that I’m going to be looking into for Q1 next year.”
