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UK advice industry heading for huge recruitment crisis

8 Aug 2019
  • Advice gap set to widen as thousands of financial advisers plan to retire in next five years
  • Huge numbers concerned about recruiting the next generation and face numerous barriers

The UK’s advice gap is set to widen as a new report from Octopus Investments reveals the potential for a huge recruitment crisis looming in the financial advice industry.

Almost a third (29%) of financial advisers polled said they expect to retire within the next five years, rising to 6 in 10 (58%) within the next ten. Equivalent to more than 15,000 financial advisers leaving the profession out of a current total of over 26,600,1 this would present a significant challenge for the industry as it attempts to recruit the next generation to fill the gap.

Advisers already concerned about attracting talent

More than two fifths (44%) 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. More than two thirds (69%) of advisers reported that they didn’t have a single adviser under the age of 30.

Barriers to recruitment

When identifying the most significant barriers to recruitment, advisers said that finding quality candidates was proving the biggest challenge, followed by the lack of structured pathway for students to access the profession.

Top 5 barriers to recruiting 

  • Difficulty finding quality candidates – 46%
  • No structured pathway for students to access the profession -37%
  • High cost of recruitment – 31%
  • Lack of awareness of financial advice as a profession – 24%
  • Stereotype that financial advisers tend to be male and older – 21%

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

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

What’s the solution?

Of those who said they faced issues with recruiting, two thirds (65%) of advisers said there needed to be more awareness of financial advice and the role it plays in society. Slightly fewer (58%) said that improved financial education in schools would help, while half (51%) cited training programmes with universities as another potential solution.

However, four in ten (40%) said that to solve the problem there needed to be a more fundamental shift in the way the advice industry is perceived.

Could a change of image be the answer?

This sentiment from advisers aligns with the views of university students. Just 1 in 10 (9%) said they would consider a career as a financial adviser, with roughly a third (36%) stating that they didn’t know anything about what a financial adviser does.

Yet when students were given more information about what the profession involves, such as problem-solving, working flexibly and making a difference to people’s lives, a much greater proportion (43%) said they would consider it as a career.

 Ruth Handcock, CEO of Octopus Investments, comments:

“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.

 “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.”


Notes to editors:

Tom Parkinson, 21 – Financial Adviser at Heritage Investments – and hoping to become the youngest ever Chartered Financial Adviser:

“The role of a financial adviser is 10% departing knowledge and 90% actively listening to people. People expect you to be older, so you have to show you have the know-how and confidence. I’ve found it such a rewarding job. I love it when clients say thank you. It’s the thought that you are truly helping somebody – they wouldn’t have been able to do what they’ve done with their finances without your help – be that estate or pension planning. You also have the utmost flexibility – there’s no other job where you can manage your diary at such a young age – your only constriction is client’s meetings. If it’s nice weather on a Friday afternoon and I don’t have any meetings I can take the time off.  

“We need to work to promote the benefits of financial advice – as it’s simply not spoken about. People don’t understand money at a young age. They don’t understand about pensions – as there’s not enough personal finance education. More should be done in schools. There is definitely an advice gap with many advisers expected to retire over the coming years – so there is an opportunity for many young people.”

Farida Hassanali, 33 – Financial Planner & Investment Analyst at Jarrovian Wealth:

 “I am one of the rare people that actually dreamed of being a financial planner from the age of 12! I loved the TV show ‘Your Money or Your Life’ with Alvin Hall that used to assess people’s finances, such as their income and expenditure, to help them achieve their goals. I’ve always enjoyed maths and using this analysis to help individuals really appealed to me.

“Despite financial services being one of the UK’s largest sectors, financial advice is still a small part of this, which leads to fewer people knowing an adviser growing up. A good place to start would be to ensure career advisers at schools understand the options available, such as the growing number of university courses, apprenticeships, and professional qualifications.”

Zoe Dagless, 32 – Financial Planner at Addidi:

“Part of the issue with financial advice is that no-one in schools or university has an idea about it.  As a profession we need to get better at saying what we do. Many of the traditional routes for entering the profession have largely gone by the wayside – like broker sales, insurance who were poached by an independent financial advice firm. But there is no set process to replace it. Financial advice is a great job and a great career. You get to work with people from a wide range of backgrounds. It’s like the intersection between art and science. You need technical background but it’s also about helping other people and it’s a well-paid and profitable endeavour. “


*Research conducted among 205 UK financial advisers 17- 21 June 2019 by Opinium through a monthly IFA panel.

Research was also conducted via an online survey among 2061 adults from 19 -24 June 2019 and 1002 UK students aged 18-21 currently studying for, or have studied A-levels or higher education 18 -27 June 2019 by Opinium Matters.

1) – Based on FCA figures (The retail intermediary market 2018) which show the total number of financial advisers was at 26,677.

For journalists in their professional capacity only. The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: August 2019.