With increasing complexity of both personal taxation and intergenerational wealth transfer, the decline of defined benefit pension schemes and the challenges posed by pensions freedom, there’s a pressing need for a new generation of talent to advise those clients who need it.
With the current adviser population standing at 28,000, the numbers speak for themselves: we need more advisers and we need them now.
Despite the rise of technology such as AI and automated financial planning services, we believe the UK still needs around 50,000 new advisers – real humans, with crucial soft skills such as problem-solving and strong communications – to service the rising demand.
The shortfall is also likely to worsen as the adviser population ages, currently hovering at an industry average of 58. As more and more experienced advisers approach retirement or sell their businesses, that advice gap will widen and the need for advisers will accelerate.
Interestingly, the growing pressure to recruit may not be directly felt by advisers themselves, who can view the advice gap as an abstract societal issue. It’s true advisers generally have enough on their plates already with the day-to-day operation of their business and so do not necessarily see they have a direct responsibility to sustain the profession.
It’s therefore a priority for financial institutions to start thinking outside the box – and, indeed, outside of the industry – when it comes to recruiting talent.
Only 37% of SJP’s academy delegates come from a financial services background. It’s not about finding those with technical brilliance, financial expertise or an extensive existing network. It’s about identifying individuals with the right drive, empathy and resilience to thrive in the profession, regardless of their background.
As the gap widens, this focus on soft skills development will become increasingly critical when recruiting.
Serving clients with rising affluence
Total UK retail wealth is large and growing. Its suggested retail liquid assets alone accounted for some £3.8trn as at the end of 2022. With an estimated 13.1 million individuals falling within the mass-affluent category (those with £50,000 to £5m to invest), including 3.7 million open to financial advice, the demand is substantial.
The market opportunity is even greater when considering personal pension assets and insurance-wrapped savings, with pension wealth firmly in the hands of those households headed by those nearing retirement.
This gives a warning of the extent of asset decumulation to expect in the years ahead, and the scale of intergenerational wealth transfer to come.
The role of technology and financial education The emergence of AI has become a key focus in adviser conversations, with concerns that robo-advisers and automated wealth-management services will irreversibly transform how clients access advice. In reality, technology is unlikely to overtake the value of face-to-face advice. While operational cost efficiencies for the industry are essential, it’s likely a blended approach of technology alongside human support will be the preferred method of delivery. Financial education will also become more important as we look to grow the workforce. It’s increasingly clear that younger generations know little about careers in advice. Most have certainly never considered it as an option, despite the potential for lucrative benefits and job satisfaction.
More can definitely be done to deliver financial education to young people and promote the value of financial planning. And the financial services profession needs to develop its own programmes to attract candidates from outside the financial services industry, including a range of second careerists.
Recruiting 50,000 new advisers is no small feat. We’ll all need to collectively pull together if we are to achieve it.