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UK advice industry set for significant recruitment crisis

News Team, 09/08/2019

A recruitment crisis could create a significant advice gap in the financial sector, according to a new report from Octopus Investments

Survey results released by the asset manager suggest that the combination of retiring advisers departing the industry and the lack of recruited advisers under the age of 30 could present significant problems in the advice industry.

An advisor exodus

Almost a third (29 percent) of financial advisers polled by the asset manager said they expect to retire within the next five years, rising 58 percent within the next decade. This would mean more than 15,000 financial advisers leaving the profession out of the current total of over 26,600.

This would create significant pressure on the wider industry to recruit the next generation to fill the gap. However, more than two fifths (44 percent) of advisers said they were concerned about attracting new advisers to their firm. This concern was reflected in the lack of younger staff currently at advice firms, with 69 percent of advisers reporting that they didn’t have a single adviser under the age of 30.

Challenges to recruitment

The report also outlined the perceived barriers to recruitment, with the chief reason offered by advisers being the lack of quality candidates, followed by the lack of structured pathway for students to access the profession.

The top five reasons stated by advisers included difficulty finding quality candidates (46 percent), no structured pathway for students to access the profession (37 percent), high cost of recruitment (31 percent), lack of awareness of financial advice as a profession (24 percent) and the stereotype that financial advisers tend to be male and older (21 percent).

Advisers were also asked if their firm had a training scheme in place to help develop new advisers, with just 18 percent advisers saying they did. This means 82 percent of surveyed firms have nothing in place.

Meanwhile, new regulations such as MiFID and RDR were additionally seen as barrier, with more than two thirds (68 percent) of advisers saying that they have made it harder to focus on recruitment.

Potential solutions

Many of the suggestions offered in the report concerned fixing perception problems about financial advice and its importance to the wider industry. Two thirds (65 percent) of advisers who said they faced issues with recruiting argued that there needed to be more awareness of financial advice and the role it plays in society. Over half (58 percent) suggested that improved financial education in schools would help, while 51 percent cited training programmes with universities as another potential solution.

These sentiments also aligned with the views of university students; whose views were also included in the report. Only 1 in 10 (9 percent) said they would consider a career as a financial adviser, with over a third (36 percent) stating that they didn’t know anything about what a financial adviser does.

Yet, when students were provided with more information about work of a financial adviser, such as problem solving, working flexibly and making a difference to people’s lives, 43 percent said they would consider it as a career.

The view from Octopus

Commenting on the report’s findings, Ruth Handcock, CEO of Octopus Investments, emphasised said: “The encouraging news is that once people actually understand what it means to be an adviser, a sizeable proportion would consider it as a career. This presents a huge opportunity for the industry and demonstrates that if we can work together to champion the profession and raise its profile, we should be able to turn the tide.”

She also stressed the importance of their work, adding: “Financial advisers perform a vital role in our society, helping people to manage their money and plan for their future and families to reach important life goals. This is why we desperately need more advisers – we simply cannot afford for the advice gap to grow any wider.”

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