Longevity has significantly increased over the past three decades, and the definition of ‘old age’ has continuously been pushed to later stages in life.
This has prompted many to keep working past the traditional retirement age, usually set from 60 to 65.
But the majority of workers still believe that most of their working life will fall between age 30 to 60. This means that, with people living longer, the need for financial advice to cater for life after employment is paramount.
The problem, according to research by The Private Office (TPO), is that the average age of an independent financial adviser in the UK is 58.
A dying breed?
Additionally, 20% of IFAs plan to retire within the next five years, with the covid-19 outbreak speeding up such plans for many planners.
The average age in other professions is much lower, TPO found. For instance, secondary school teachers tend to be in their late 30s and accountants in their early 40s.
Financial advice should start long before retirement to make sure planning for later life is solid enough, the wealth firm argues.
This means that the average customer will need a trusted adviser for at least a decade or so, in order to get the most out of their financial planning.
But with the industry ageing faster than its clients, how can professionals provide the long-term ongoing advice their clients need if they won’t be around in five years’ time?
‘Eat what you kill’
Ed Tudor, financial adviser at The Private Office, said: “There is no definitive answer to as to why this disproportional ageing has happened in the financial services industry, but there are certainly some clues.
“Thankfully a thing of the past; but the old days of sky-high commission for product selling resulted in a widespread mentality of ‘eat what you kill’, and therefore the incentive to share this with anyone else was non-existent.
“This left a huge gap in the industry where no one was wanting to take on or train up new advisers.
“Also, for most smaller IFAs, their ability to leave the industry is determined by another advisory business agreeing to buy their business and/or client bank.
“Over the last 10 years, there has been a noticeable shrinking in the number of these kinds of sales, as regulatory and due diligence requirements have increased, therefore some advisers are finding they are having to keep working a lot later than they may have anticipated 10 years ago,” he added.
Diversity in the spotlight
Fresh talent seems to be coming into the sector, however.
Over the last few years, many companies have rolled out training programmes, apprenticeships or advice academies to attract younger people.
Tudor said that, in 2019, the youngest adviser to join the sector was 19.
While this creates a much-needed generational shift for the industry, it also comes in at a time where the focus on diversity and inclusion is at the forefront.
He added: “It’s important for IFA firms to have diversity – to have advisers of all ages and sex, so that customers can find someone that they are comfortable to work with over the long term.”
