This excess demand for financial advisers stems from recent Office for National Statistics figures which revealed that the number of 55-year-olds and over in the UK with more than £100,000 in financial wealth is around 3.8m people.
According to Standard Life, financial advisers are likely to be actively servicing, on average, up to a maximum of 150 clients each in the post-RDR regime.
Given that Financial Conduct Authority figures showed there were 20,453 independent financial advisers in the UK in December 2012, the outcome is a shortage of around 5,000 advisers to meet the potential advice demand, Standard Life said.
Looking also at the 4.9m people aged 45 and over, with more than £100,000 in financial wealth Standard Life pointed out that while not all of this younger age group might immediately need financial advice, as they start to approach the at-retirement stage it is likely they will turn to a financial adviser.
This means there could potentially be an adviser gap of 12,674 in the next 10 years if the current number of advisers remains static.
Eddy Reynolds, head of adviser and investment proposition at Standard Life, said there is an ‘adviser’ gap to service higher net worth clients, particularly those among the baby boomer generation approaching retirement.
“This asset rich generation will be in need of financial advice to ensure they are making the right choices for their retirement. Selecting the most appropriate income source for their needs, taken from the right investments in the most tax efficient way is complicated and getting professional financial advice will help them to be in a position to make informed decisions,” he said.
Reynolds added: “The belief that there is a decline in potential demand for the financial adviser market couldn’t be further from the truth. There are a significant number of people aged over 45 who are asset rich and the financial adviser marketplace needs to grow in order to match the demand for advice that will inevitably be coming in future years.”
Office for National Statistics – UK population with more of £100k of financial wealth
Age number of people No of advisers based on 150 clients Adviser Gap
based on 150 clients per adviser
- 45+ 4,969,058 33,127 12,674
- 55+ 3,834,265 25,562 5,109
