"The man who is a pessimist before 48 knows too much; if he is an optimist after it, he knows too little,” Mark Twain once said.
It’s a quote that feels appropriate as the advice industry worries about its future. Sometimes it feels like a case of working out which will drop off more quickly: supply or demand. But, at the risk of proving the first half of Mr Twain’s point, here are some reasons to look to the long term more positively.
As it happens, it’s now 48 months after the RDR, but the pessimism began long before this point. Anxiety over the number of advisers in the industry is nothing new; disquiet about the lack of newly qualified intermediaries was recognisable long before the start of 2013 brought in the intended era of greater professionalism.
The Financial Advice Market Review gave a nod in this direction via a plan to consult on changing the time frame in which advisory firm employees must gain the right qualifications. In an effort to ensure would-be advisers are able to qualify while still holding down the day job, the FCA suggested extending this from two-and-a-half years to four years.
The idea is that stricter rules governing a business’s senior managers will boost the way firms oversee all their employees – for example, working more closely with those who have not yet qualified.
This is very much in the category of long-term solutions – and not just because the regulator has yet to even begin consulting on the proposal.
I wonder, though, whether the problem is actually all that pressing. The RDR has not yet brought us close to a ‘cliff edge’ in adviser numbers. Figures have actually levelled off in recent years.
The number of advisers stood at 23,864 at the end of 2015, down by just one on the 2012 figure of 23,865, according to Apfa. Further updates from the watchdog this year suggest a continuation of this pattern, and the number of advice firms has also remained static. These numbers could mask a variety of changes, but the overall trend looks clear.
Another concern relates to the average age of an adviser. The cliff edge will be here within the next 10 years, according to Investec Wealth, whose research has found that 55 per cent of intermediaries are worried about a lack of graduates or trainees joining the industry. But this isn’t an overwhelming figure, and the sample size – 94 – makes it unwise to draw conclusions.
Who will replace these advisers if they do go? Here’s one theory, though I doubt few will respond well to an argument that welcomes the rise of the large advice networks, the return of big banks, and the increasingly ubiquitous use of the ‘wealth manager’ moniker. Whatever their flaws, the giants of the industry have the capacity to start training, and attracting, many more would-be advisers. And where ‘wealth management’ is concerned, sometimes a rebrand can be similarly helpful in attracting new faces. Many of these bright lights will end up seeking their independence in time.