Your IndustryNov 12 2019

We need to attract the next generation

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Its foundations are myriad. However, as I see it, there are few key issues at play.

First, demand for advice has outstripped supply. Research we conducted in 2017 found 13 per cent of advisers didn’t have the capacity to take on new clients at retirement.

We know pension freedoms are part of the reason why.

People have a greater variety of options, and this has made making good choices more complex.

We need access to the next generation of talent if we are to truly democratise financial advice

As a consequence, the services of financial advisers, and indeed the wider savings and investment industry, are more valuable than ever.

The increased demand is almost exclusively coming from people at retirement.

For a younger generation that has had less time to accrue wealth, the perceived cost of advice and a lack of awareness of its benefits are fundamental issues we cannot ignore.

If the value of financial advice is not appreciated by young people, then an assumption it is unaffordable or unnecessary could mean they are less likely to explore it as an option at a later stage – which is problematic when we know the need for advice is rising. 

The conventional wisdom is technology holds the answer.

What the future looks like is hard to predict with any great certainty, but I think we can say a mixture of automated services and digitally enhanced solutions – some already making waves in the market - will increase the availability and appreciation of financial advice in the long-term.

Technology will allow advisers to deliver an individual and tailored service to clients in a scalable way and make services which were previously restricted to the very wealthy more accessible to everyone.

But, to get to this point, investing in new technology is only half the battle.

We must give the human capital needed to deliver the innovation that will revolutionise our industry equal recognition.

Financial advice is already a highly skilled profession.

This will only become pertinent as digital technology is more firmly embedded in the services that advice businesses offer, and the support systems advisers have at their disposal become more complex.

We need access to the next generation of talent if we are to truly democratise financial advice.

This is no mean feat. In our increasingly technology-centric world, competition for digital skills is fiercer than it has ever been.

It is a shortage that is impacting every sector, but it does not help our industry is already dealing with a shortage of talent.

Figures from advice network Openwork in August revealed nearly three quarters of financial advisers believed industry trade bodies and financial services providers needed to work together to attract more recruits.

This is easy to get on board with, but what the drive needs to look like in practice is more elusive.

Encouraging as many routes into the profession as possible is at least part of the answer.

Apprenticeship programmes and traineeships are already opening up financial advice to those without a university background.

Indeed, the Financial Planning Traineeship we offer through our 1825 Academy does not require a degree.

To build on this, the concept of lifelong learning should also be fully embraced across the industry.

As a minimum, this means our businesses need to make training available to staff at every stage of their career.

It is the only way the leaps in ability needed to embed new technology across an organisation are possible.

We also know people are working for longer and many will change career path several times before they retire.

Making it easy for workers from different backgrounds to bring their skills to financial services will also extend the talent pool the industry has access too.

Finally, at a more fundamental level, industry leaders need to work with government agencies to encourage initiatives that promote digital and financial literacy in primary, secondary and tertiary education.

This is already happening, but the sponsorship of industry is needed to drive home the importance of these skills in the modern world of work.

By attracting the next generation to our industry, we can ensure the benefits of financial advice are felt more widely, now and in the future.

There is a responsibility to do so, but there is also a significant commercial impetus.

In a fast-moving digital environment, talent needs to be given greater prominence on boardroom agendas, both as a risk and as an opportunity.

Noel Butwell is chief executive of Standard Life Savings