The financial advisory industry has been slowly contracting in the last few years, with many IFAs leaving the sector and too few entering it.
According to The Heath Report Three by trade association Libertatem, the majority of UK advisers (45%) aged 56+, while just 6% are aged 35 or under.
It also found that, as of January 2018, there were nearly 33,000 advisers due to retire, which could halve the sector’s workforce.
“The overall number of independent financial advisers is falling, due in part to market consolidation, and those who remain tend to be in the higher end of the age demographic,” a spokesperson for the Chartered Insurance Institute (CII) told International Adviser.
This means the industry needs to boost its efforts to recruit younger talent to train the next generation of advisers and wealth managers.
Reaching out
But how can the sector make itself appealing to young people?
The CII added: “Mentoring provides a great opportunity to engage young talent with a passion for the profession, whilst also allowing new entrants direct access to a wealth of knowledge and experience which has been built over decades of working in the profession.”
Tom Emery, group HR director at Brooks Macdonald, agreed.
He told IA: “The wealth management industry has typically been a great environment for graduates, as firms place an emphasis on training and development through, for example, working directly with senior staff to learn and grow organically.”
A two-way street
Richard Ardron, joint managing director of New Model Business Academy (part of SimplyBiz Group) believes apprenticeships are a good place to start.
“Advisers create opportunities in their firms that will benefit both their business and their clients in the long-term, but also will open the door for someone to a career in financial services which may not have been there otherwise,” he told IA.
“Apprenticeships make the ability to develop and grow their business in this way a reality for firms, as they are often funded, and provides training, support and practical experience – a real career from the start.”
Technology and innovative skills
Ardron added: “The average age of advisers in the market at the moment presents an enormous opportunity for young people. If they can strategically position themselves into a place where they can take on the business/clients of a retiring adviser, with a forward thinking, tech-focussed and efficient business, they are in for a very successful career ride.”
And advice businesses are now turning to alternative ways of recruiting young people, such as social media, Louise Blair, head of human resources at Foster Denovo, told IA.
“As an industry I think we are seeing positive progress in attracting new and younger talent by tapping into new recruitment streams such as social media.
“One of the things we find is most important to new recruits is being able to understand and visualise their developmental journey and how they can continue to progress.”
Shaun Godfrey, head of academy marketing and engagement at St James’s Place, said: “There are many opportunities for young talented advisers to build a successful career catering to the modern client, and with technology acting as a positive disruptor to the sector there will be huge opportunities in the back office functions as well.”
As part of its long-term strategy, SJP Academy is also looking to rebrand to make it more appealing to “those outside the sector”, he told IA.
Qualifications not to be discarded
“Encouraging younger people into financial education should start at an early age,” New Model Business Academy’s Ardron added.
Although young people don’t need specific qualifications to enter the sector, they still need education to ensure high professionals standards, SJP’s Godfrey said.
“There isn’t one route into the sector, and there are lots of options available dependent on age or personal situation.
“But, of course, there are core minimum examinations, such as the diploma in financial services, which must be passed in order to become a financial planning and wealth advice professional.”
Work on image and proposition
Education is not the only solution, however.
Firms need to make themselves attractive too.
With more people looking for flexible working, a positive culture and a role and company that match their values, advice and wealth businesses have to deliver on their part as well.
Richard Fraser, chief executive of asset management and IFA firm Frenkel Topping, said: “Diversity in all its forms is an undeniably vital factor in encouraging millennials and Gen Z-ers into the industry.
“These are socially-conscious generations that actively search for companies which align with their values – and that includes employing a workforce which is diverse in ethnicities, genders, cultures, backgrounds, classes and more.”
