Your IndustryJan 12 2016

What banks returning to advice means for your industry

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What banks returning to advice means for your industry

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.