Debates over how many advisers we need in the UK have raged since long before the Retail Distribution Review came into force.
Many lament the dwindling number of intermediaries represents an oft-cited ‘advice gap’; others assert that a necessary focus on high net worth individuals means there are still too many for each to be viable.
Standard Life has waded into the debate, publishing the results of some in-office number crunching to state that we are 5,000 advisers short of the ideal number, even if we assume they will only service high net worth clients.
It’s ‘back of a fag packet’ stuff, but here goes.
The Edinburgh-based provider based its calculation on recent ONS figures showing 3.8m people aged 55-years-old plus have more than £100,000 in financial wealth.
Standard Lamp then made an assumption that each adviser could service 150 clients each, giving a potential sector size of 25,333.
It then looked at the latest figures from the Financial Conduct Authority on adviser numbers and, specifically, took the number of individuals that have an RDR-required statement of professional standing and that work in a financial advice firm: 20,453. So, we’re 5,000 (or 4,880 to be precise) short.
It’s positive stuff for the sector - and it’s timely, coming as it does on the back of Axa Wealth research conducted by YouGov and published this morning (23 July), which revealed that one in five UK adults intends to seek advice for the first time to prepare for retirement.
However, there were at December 2012 a total of 31,132 individuals with a statement of professional standing. With the caveat that these numbers are shaky - some 945 of the total were only part-qualified at the time, while more than 4,800 were employed (precariously you might say) at banks or building societies - they could suggest we are actually still nearly 5,800 advisers heavy.
Standard’s Eddy Reynolds, head of the firm’s adviser and investment proposition, said in a statement: “We believe there is also an ‘adviser’ gap to service higher net worths, particularly those among the baby boomer generation approaching retirement.
“In other words, more people than ever before will be in need of financial advice but there will not be enough advisers available to help them. This asset rich generation will be in need of financial advice to ensure they are making the right choices for their retirement.”
He has a point, but why do we consistently and obsessively focus on higher net worth, “asset-rich” clients?
Obviously there could be room for all of these advisers and more if we broaden the horizon on the client pool. Given the ever-increasing demands on retirees and the introduction of auto-enrolment, there is surely a market here?
Either way, let’s hope Standard Life is on the right track.