Earlier this month, Santander UK stated from March it will once again offer branch-based investment advice.
Similarly, the Royal Bank of Scotland is set to augment its mass market retail investment advice this year, the bank confirmed to FTAdviser.
Now, a number of industry spokespeople have voiced the belief that the recent moves by the two banks - which may encourage other large banks to follow suit - could be the start of a wave of new blood coming into the advice space.
Brian Spence, managing partner at London-based consultancy Harrison Spence, said the influx of new blood would be a result of the law of unintended consequences.
He said one of the disadvantages of the regulatory environment is there are very few new entrants into the market place.
“As people have pulled out, the bancassurers have pulled out, the life offices and the brokers and the systems that encouraged new entrants into the market place disappeared, which has meant that for the last five years there have been very few entrants into the market.
“The law of unintended consequences of this new move to pull the bancassurers back into the market place means it is fantastic for the country, it is fantastic for the financial services industry and it is fantastic for people.”
He added it was his belief that if the banks come back into the sector then the universities will start to produce courses which will allow graduates to come out with a level four qualification, which will enable them to work with the banks and bancassurers.
“The reality is that when the financial adviser working as a bancassurer gets fed up of just selling a product they’ll look to get into independent financial advice because they’ll realise that is giving holistic financial advice.
“They will realise what they are doing is limited. (It) is good because it is selling a product that people need, but it is limiting for their career and they will move into the IFA sector.
“So all of a sudden the IFAs who can’t get for love or money new graduates through are going to find there will be a lot of new blood who are ready with some experience to retrain.”
Mr Spence added technology would help an awful lot and that robo-advice is just a form of technology, which will enable banks to more efficiently adhere to regulation.
Simon Goldthorpe, executive chairman of national firm at the Beaufort Group, said financial services, particularly financial planning, are fundamental to the UK’s economy.
He added the average age of this workforce continues to increase and we are in urgent need of new and young recruits.
Mr Goldthorpe said: “It will be interesting to see if the big banks are serious about moving back into the advice sector.
“Although we have seen this all before, the need for proper financial advice is greater than ever. Is there a gap in the market for the banks to fill?
“If they do it properly, yes, there is, but if they cherry pick and discriminate against their non-core customers - as they do for mortgage lending, for example, IFAs will continue to pick up business from banks.
“The banks, however should continue to be recruiters of young blood and, having been trained up, we expect many of these new recruits to move to IFA and other advisory firms. That is what happened in the past, with life office reps crossing the line to become IFAs.”
Roger Brosch, chief executive of Foster Denovo, said following the demise of the majority of insurer direct sales forces in and around the late 1990s, the banks became the primary source for new blood to enter the personal financial advice sector.
He said: “As the banks closed down their own advisory capability around the Retail Distribution Review (RDR), many more ex-bank advisers were forced to move into this space. This led to the question of where the next generation of advisory capability would come from.
“The traditional training grounds of the last 30 plus years were no more and had not been replaced. The return of the banks to the personal advice sector, in whatever form that may take following the FAMR, indicates that the previous mechanism may well be reinstated.
“Although this will develop quickly it will likely be years however before we see any material numbers of financial advisers from the banks then moving into the wider industry.
“It is expected that much of what the banks will offer will be ‘simplified’ or ‘robo’ advice and as this is a rather different approach to market, it is less likely to require the same level of face to face advice.”
Mr Brosch said as fresh blood begins to enter the market for the first time in a generation it is likely to take at least a decade before we see a strong flow of experienced talent into the independent sector in any quantity.
Chris Hannant, director general at the Association of Professional Financial Advisers, told FTAdviser the route into the profession for many current advisers was through the old life companies or banks and that this was also the potential route into advice for IFA clients.
He said: “Most people don’t suddenly acquire substantial assets – they do so by saving. You need to start somewhere. You might need a simpler basic service to start and need something more complex later in life.
“If you look at our response to the FAMR, one of the things we were supporting was a simpler advice regime for a limited range of products.
“The banks may be looking to develop new clients and accessing new clients and growing the market.”
In February last year, it was apparent that the financial advice industry was facing a supply and demand problem in terms of new recruits, especially ahead of the potential rush for advice following April’s at-retirement reforms.
In October 2014, Apfa said that more needed to be done to recruit young new talent into financial advice and create a sustainable future for the profession.
ruth.gillbe@ft.com
