Malcolm Streatfield, chief executive of listed advisory firm Lighthouse Group, said new blood coming into the industry was not enough to replace the massive numbers that have left due to providers closing their advisory arms and the outflow of experienced advisers.
He said: “The industry must recruit and be prepared to train people up from scratch. In the past large corporates such as the Prudential took on hundreds of staff as advisers and trained them up. Many of these took exams and became qualified IFAs.
“But without the large employers hiring – rather we hear about them ditching their advisory arms post-RDR – where is the fresh blood coming from?”
Companies such as Lighthouse have been taking on staff. At the end of May the group had taken on 49 recruits and aims to take on 10 recruits every month until July 2015 for its national advisory arm.
However Mr Streatfield said this would not compensate for the “huge outflow”, adding: “I’ve seen figures that suggested one of the UK’s largest life companies has a sales force of 36,000 in Vietnam. That’s more than the entire advisory community in the UK.
“I’m not saying we should return to the old days of ‘the man from the Pru’ but I do believe they did things properly and encouraged people to save.
“But products have become so complex over here. There is a dearth of advisers and regulation has become so tight so that in place of a culture of saving, we have a culture of credit and borrowing. What a legacy to pass on to the next generation. We know the price of everything and the value of nothing. What a legacy.”
Derek Bradley, founder of online forum PanaceaAdviser, agreed with Mr Streatfield. He said: “Any business that designs and manufactures products has done so because it has identified a consumer need and must get these distributed. This means finding a sales force, and the sales process needs to be incentivised.
“That incentivisation was in the form of financial reward and the buyer could choose whether or not to buy, based on myriad factors.”
He said that since the retail distribution review there were fewer incentives and therefore fewer advisers, although the need for distribution remained the same.
Mr Bradley added: “Improving knowledge and creating an aura of professionalism is laudable, but the way RDR has been implemented blurs the lines between the wish to create the professional adviser and the distribution of financial products. That is where I believe the whole RDR process has gone wobbly.”