The shortage of young advisers did not come as a surprise when the regulator published figures on the age profile of retail investment advisers this month.
One in 20 retail investment advisers are under 30-years-old, according to the Financial Conduct Authority – almost as rare as a ‘purple one’ in a box of Quality Street.
Just 261 advisers are under the age of 25 and 2,209 are under 30, making up 5.7 per cent of the 43,326 advisers qualified to offer retail investment advice.
Two months ago I was searching for young advisers to feature in an article on the theme of the future of advice, and it was not an easy task. It appears that I was searching for a needle in a haystack.
Anecdotally I had heard, on multiple occasions, that the average adviser was in their late 50s and about the need to bring young talent into the industry to succeed those who leave for retirement.
But the FCA’s figures brought this situation into stark reality, with the 50s age bracket being the most common among retail investment advisers.
Accountancy is trumping advice
In a recent article about bringing down the barriers to a career in advice, accountancy was cited by two people in the academy business as an example of an industry that had a more visible profile when it comes to career options in finance.
Hearing this reminded me of a TV advert I saw recently about accounting qualifications. The advert seems to have been quite effective as I still remember it, specifically because of the unexpected soundbite that “you don’t need to be good at maths” to pursue a career in accounting.
On YouTube, I was surprised to find that this 30-second advert about accounting qualifications had garnered over 1.5m views.
The visibility of accountancy as a career path is something I have also experienced first-hand, with businesses like the Big Four being staples at various university career fairs I attended. Financial advice companies, on the other hand, were not – or their profile was such that I do not recall them being there.
Are consolidators the answer?
The training that advice academies offer, with the opportunity to gain qualifications as part of a structured programme and a clear objective of becoming an adviser, would appeal to many students keen to have a job lined up before graduation.
Perhaps the fact that nine in 10 businesses (89 per cent) have five advisers or less, according to the FCA’s 2020 market review, is a factor behind the advice industry’s lack of visibility at events such as career fairs.
And perhaps the growth in consolidators, some of which also have their own academies, will lead to the advice industry becoming more visible as they seek to build UK-wide businesses.
The need for proaction
Amid the emphasis on the importance of pensions advice, and employees amassing a growing collection of defined contribution pots, the regulator’s figures highlight the issue of whether there will be enough advisers by the time the next generation approaches retirement. Or will robo-advisers become sophisticated enough in 20 to 30 years' time to take up the baton?
They are also a reminder of the potential consequences of a shortage of advisers in the future, if not enough is done about it now, ie the cost of advice increasing, and a widening advice gap that the industry is currently making efforts to address.
Chloe Cheung is a senior features writer at FTAdviser
