Escaping the regulator’s Canary Wharf HQ to meet financial advisers has revealed the importance of attracting new blood to the advice industry, Financial Conduct Authority chairman John Griffith-Jones has said.
Mr Griffith-Jones said he has been using the regulator’s Live & Local programme of events - on tour across the country since last month - to speak to advisers and gain an insight into the issues they face.
Suitability reports, insistent clients and the FSCS levy are the most repeated concerns, he said.
But speaking to FTAdviser at the FCA’s Canary Wharf offices, he also said he has been learning about the urgent need to attract young people to the profession.
“Maybe the biggest one was listening to IFAs talking about the future of their industry and getting younger, high quality graduates into the industry,” he said.
“Quite a lot of these firms are run by people who used to be part of large bank or insurance sales forces and left when they re-organised themselves but they were carrying on doing what they learnt to do and are faced with needing a recruitment and training programme.
“There is a cost to bringing on apprentices and young people but this generation of advisers is growing older and if we don’t bring any new blood at the bottom of the pyramid at some point there will be a shortage.”
He said he was optimistic an advice Armageddon could be avoided, however.
I do see a really good career now emerging as a modern adviser who is RDR (Retail Distribution Review) compliant. John Griffith-Jones“I don’t see it as a dying industry.
“I do see a really good career now emerging as a modern adviser who is RDR (Retail Distribution Review) compliant and I would like to feel the FCA were encouraging that. It is not our job to act as a recruitment agency but to make sure we don’t do anything to hinder the next generation getting into the industry.
“But I learnt far more about that out of this building than talking to people in this building.”
Issues about the lack of young blood in the financial advice industry have already been raised by the Association of Professional Financial Advisers.
The average financial adviser is aged 58, according to one study. The Personal Finance Society has teamed up with 15 firms to launch a financial adviser apprenticeship in a bid to attract fresh blood to the industry.
Mr Griffith-Jones also touched on the issue of the Financial Services Compensation Scheme levy - which trading advisers contribute to in order to pay redress to clients of advisers now in default - which a number of advisers had raised with him.
One potential solution was a “no claims bonus” which would reward firms for good behaviour.
“Who pays and how much is an issue, particularly when it goes up. If you start from the position that to have the scheme in principle is desireable and the industry should pay for it then it becomes a fairness and allocation question.
“There are many plausible alternatives here such as a no claims bonus, pre-funding, fewer buckets and broader categories. All of them come with pluses and minuses.
“Firms not surprisingly say ‘we have never had a claim so why shouldn’t we get a discount’ which is a perfectly sensible and plausible question but the issue is who is going to administer it all.”
For more information about the FCA’s Live & Local events, visit the-fca.org.uk/live-and-local-map
Adviser view
Susan Hill, a chartered financial planner with Hertfordshire-based Susan Hill Financial Planning, said: “Obviously you have to have a certain level of qualification and I think the barrier is a cost issue.
“A lot of small firms are sole practitioners and it is quite a cost to bring someone in an take them through the diploma process.”
