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Can attracting young blood help resolve the UK ‘advice gap’?

No, not Sydney Youngblood, famous for his 1989 hit ‘If only I could’ but rather, young blood as in attracting a younger generation to client facing roles such as IFA, Financial Planner and so on. The average age of someone holding FCA’s CF30 designation is apparently 50. The actual figure is debatable I’m sure but having spent the last 20 years around people in these roles, the vast majority have 1 or 2 more grey hairs than me. So it is safe to assume that the role is performed on the whole by people of a more mature age.

That’s not such a bad thing is it?  Do clients prefer to get advice from someone with some grey hair and life experience? Well, some clients do, but on the whole clients just want someone who is trust worthy, knows what they are doing and offers a sound financial advice proposition with reasonable fees. In days gone by, when it was legal to advertise for someone with at least ‘5 year’s experience’ or ‘aged 40 plus’ or even ‘a male aged over 40’, companies filled their ranks with exactly this profile and age group. Back in the 80s and 90s companies targeted individuals with no industry experience whatsoever, their favourites being former salesman, ex-serviceman and retiring sports professionals. In fact, I recall that a fellow delegate on my 1996 FPC 1 course was a former professional goalkeeper no less! During the 80s and 90s, if you were at a crossroads in your career, had some life experience and could talk the hind leg off a donkey, then you could become a financial adviser. This approach taken by advisory firms and providers alike has without doubt produced some excellent IFA’s many of which have gone to build successful practices of their own.

The issue facing the industry though is that these very same IFA’s who have grown through the industry during the 80’s, 90s and 00s have, or are about to retire. Post RDR, many commentators have spoken and written about the ‘advice gap’ which is partially attributable to IFA’s focussing on HNW clients as well as the collapse of Bancassurance and direct sales teams. The ‘advice gap’ could in theory become even wider should the industry fail to bring in new young blood over the next 5 years or so to offset the loss of IFA’s that are due to retire over the next 5 to 10 years.

When I talk to these businesses about their recruitment needs, there is a clear recurring theme. There is an appetite to recruit IFAs who are in the early stages of their careers. Firms want to look at Graduates with a relevant degree with a view to bringing them through a clear career path and professional qualifications, giving them exposure to back office admin, fund research, paraplanning and finally onto a full client facing role. However, this is a big investment and it may be years before the new young blood are fee generating and covering their overheads. It is also potentially very time consuming with many smaller IFA firms simply not having (or making) the time to invest in this level of training and development.

So, how is the industry tackling this issue? Well, a number of companies have taken matters into their own hands. St James’ Place for example offer an ‘Academy’ which is specifically aimed at career changers and graduates. There is also the Financial Adviser School run by Sesame Bankhall in partnership with a number of providers. This a direct attempt to identify, recruit, train and create the next generation of client facing professionals. Prudential have also begun to explore the opportunity of cross training Paraplanners and Broker Consultants as Financial Advisers. Beyond this though, very little seems to be happening to tackle the issue despite there being some awareness and acknowledgement of the problem.

So why aren’t Graduates flocking to the advisory sector of financial services of their own accord? Their perception of the advisory world of financial services is not great. A recent CII study concluded that graduates, on the whole, just don’t see our industry as sexy. They see the role as uninspiring without a clearly defined career path and not especially well paid.

It’s an issue that’s not going to go away and one that needs addressing. I believe that a collective and coordinated effort is required to fully assess the situation, understand the consequences of non action and propose a course of action. That collective should include representative bodies like the PFS, examining bodies, the existing advisory community, recruitment professionals, universities and the FCA to bring about a change in attitude of potential young blood and potential employers alike.

I love this industry, it is exciting, dynamic, and dare I say sexy! I used to explain to my clients that I am a bit like their doctor and responsible for their financial health. Using my bed side manner I would diagnose their symptoms and prescribe a solution. Cheesy I know but it worked and clients understood my role. There are very few other careers that can be so satisfying. Seeing a client realise their goal of moving to Spain on retirement or delivering a death claim cheque to a widow who can maintain her standard of living. That’s the difference an adviser can make and I wonder if potential young IFA’s have an understanding of what impact they can have on a client’s life? I imagine that if you were to ask a lecture hall full of Graduates to explain what a financial adviser does, most would probably not have a clue.

Hats off to those firms that are already doing something about this and making an investment in the futures of ’20 something’ wannabe financial advisers. There is some incredible young talent out there who are falling through our hands and ending up in analyst roles in banks and in 10 years time, they’ll wake up one morning and think, “what difference do I really make?” Let’s educate the young blood now, show them the difference they can make, the value they can add to society and hopefully more and more ‘young blood’ will come into advisory roles.

 

Ian Angus-Felton is a Senior Consultant with Redmill Resourcing. An IFA until a couple of years ago, Ian now provides recruitment, retention and training advice to the IFA and Wealth Management sector. 

Author: Ian Angus-Felton
Posted: Wednesday, December 10, 2014 | 12:33:19 PM


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Comments

15 December 2014 | 6:30:32 PM  Eugen Neagu wrote:
'Young blood' could help, however there is not a big 'advice gap'.

In every field there are people who cannot afford a service. It is a potential market.
10 December 2014 | 1:38:37 PM  Richard Smith wrote:
The industry is contracting for the very same reasons you left.

Not enough income.
Much too much regulatory involvement.
A changed world - what was once known by a few is available to everyone who wants to find it.

Fact is if the IFA/Financial Services/Banking and Investment industry really worked - everyone would be rich after taking advice. Truth is the opposite of that.

Of course there are a number of good guys that will continue to earn good levels of income, but the rest are as they say - history.



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