Your IndustryJun 1 2017

How are adviser firms using apprenticeships to recruit into the industry?

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How are adviser firms using apprenticeships to recruit into the industry?

The advice gap and what to do about it has been well documented over the years.

The problem has been exacerbated by fewer people coming into financial advice, with younger people not perhaps aware it is a career option or if they are, they do not find the job appealing. 

According to St James's Place Wealth Management, since 1992 the number of financial advisers in the UK has fallen from 250,000 to around 23,000.

At the same time the need for advice has soared as pension freedoms mean people face the prospect of a longer retirement to fund and a low interest rate environment in which to try and grow their savings.

New blood

But there are signs a new, younger generation of people are considering financial advice as a career.

This has been helped by an industry-wide attempt to appeal to younger professionals through such bodies as adviser academies and schools, and to promote financial advice and paraplanning as an option for those who want a career change at any age.

A survey by Investec Wealth & Investment found 55 per cent of advisers are concerned or very concerned that the financial adviser sector is failing to recruit sufficient numbers of graduates and trainees into the industry.

Asked for feedback on what measures would help to overcome the recruitment gap at trainee and graduate level and the most popular suggestion was to introduce better training and mentoring schemes, followed by building stronger links to universities and colleges.

Evidence does not suggest the younger generation is approaching our industry directly for apprenticeships, especially if we compare it to retail, hospitality or manufacturing.Cath McVey

In April this year, Cara Gilbert became the youngest person in the UK at the age of 19 to complete the diploma in financial planning from the Personal Finance Society – a feat she achieved while working full time at Standard Life for the past two years, having started in the company’s internship scheme.

In a statement from Standard Life, Ms Gilbert explained: “I knew I wanted to work in the financial sector when I was at school. I enjoyed maths, business management and accounting subjects.”

Making people aware, whether that’s at school, college or university that an interest in subjects like maths and business studies can lead to a job as a financial adviser is a step towards encouraging the younger generation to take notice of the industry.

Cath McVey, human resources director at Ascot Lloyd, points out: “Evidence does not suggest the younger generation is approaching our industry directly for apprenticeships, especially if we compare it to retail, hospitality or manufacturing.”

She explains Ascot Lloyd partners with schools, colleges and universities to promote the firm “as an employer of choice for young people thinking of their careers”.

University fairs and funding

Darren Smith, head of Old Mutual Wealth’s Financial Adviser School (FAS), notes they have a similar approach to targeting people they believe can benefit from learning more about being a financial adviser and what it entails.

He says: “FAS currently attends some college and university fairs and presents on financial education, [talking about] why it’s important and to explain the advice sector and what a financial adviser does.

“Our intention is to work with adviser firms and encourage graduates to consider an apprenticeship in financial advice.”

The Department of Education (DoE) recently had to confirm funding for apprenticeships has not been frozen, after some concerns about the future of the training scheme were raised by the Personal Finance Society (PFS). A spokesman for the DoE confirmed there was “no funding freeze”. 

Yet Keith Richards, chief executive at the PFS pointed out: “While the government has continued to make apprenticeship funding available, allocations are significantly lower than training providers were anticipating and well below that required to fulfill demand from the sector.”

He attributed this to the general election which has put decisions such as this on hold until the results are announced.

In 2016, the PFS secured the backing of 15 firms as it sought to create a government-funded apprenticeship scheme and confirms it has seen a huge response, with more than 300 registrations of interest from advice firms.

It said 10 apprentices had started the programme in March while another 52 were due to start in April, unaffected by the funding issue. 

Before long, we realised that a more robust apprentice programme would bring us the resource we needed to match our ambitious growth plans.Fiona Treadwell

This is why it is vital for the industry to offer several avenues for those who are interested in becoming a financial adviser to be able to get the right qualifications.

Many of the larger financial advice firms have set up apprenticeship or traineeship programmes.

Fiona Treadwell, talent and development business partner at Mattioli Woods, explains: “To test the water, we started off small with our first apprentice programme back in 2011. It was a great success. We found the attitude of those on the programme refreshing. 

“Before long, we realised that a more robust apprentice programme would bring us the resource we needed to match our ambitious growth plans – as well as delivering a group of extremely enthusiastic, committed and motivated members of our organisation.”

But has the programme found appeal among a young age group, or do they still need convincing financial advice may be a rewarding career choice for them?

Ms Treadwell notes: “It’s true that when promoting our programme to local schools and colleges, students show more interest in us because we have a proven track record – often involving apprentices from the same school or college who now have burgeoning careers with us.  

“We try to take along a couple of apprentices, past and present, to these events so the students can talk on a more meaningful level about this alternative to the university route and find out first-hand what it is really like.”

She admits it is often the parents who need more convincing than the students that an apprenticeship is the right next step “as they may hold the belief that university is the only real route into a satisfactory and remunerative career”.

Opportunities abound

Mr Smith believes the apprenticeship scheme has been a helpful way of encouraging younger people into the industry.

“The apprenticeship scheme offers great opportunities for both people within the advice industry and younger people considering their future career.

“We’ve already talked to several firms who are looking to train up their employees and are keen to make use of the new structure the government has put in place.”

Old Mutual Wealth’s Financial Adviser School told FTAdviser at its first graduation ceremony in April this year it plans to scale up the school to help close the advice gap.

FAS received 319 enquiries and 90 applications by the end of the first quarter of 2017, and currently has 37 students, the average age of which is 27. 

Marie Calvin is national academy manager at 1825, the advice arm of Standard Life, and has seen similar demand for the traineeships they now run.

It’s sometimes a common misconception that trainee financial planners are graduates who are just out of university.Marie Calvin

“Our first traineeship programme started in December 2015 so that was really our first opportunity to bring new people into 1825 with the goal of training them towards becoming a financial planner in the future. 

“As a result of that we’ve then run two further intakes for that programme, so we have three cohorts running in total at the moment and all of those individuals are on a structured two-year development programme towards really learning the knowledge, the skills, the experience and qualifications to become a financial planner over that period.”

Older talent

She explains the structure an apprenticeship provides means they do appeal to younger students but she also points out it is important to observe the role they play in bringing older people into the financial advice industry.

“What I find with running my traineeship program is it’s actually quite a diverse age range in terms of the individuals we have on that programme, from graduates just out of university aged 23, right up to people who have fairly significant careers in financial services but just never managed to break into the financial planning industry up to age 39.

“It’s sometimes a common misconception that trainee financial planners are graduates who are just out of university,” she says. 

“In fact, I have a few people who never went to university but have got great careers and decided this was the next step for their careers. It’s there to really support people who are clear that becoming a financial planner is something they really want.”

Ms Calvin adds 1825 will be rolling out a similar traineeship programme for paraplanners this year in recognition of the fact “people don’t typically come out of university and say, I want to become a paraplanner”.

For the right personality, we quickly try to open their eyes to the variety and rewards of a financial services career.Fiona Treadwell

“We’re doing some work to raise awareness of the fact some of your existing skills could be very useful when applied in a paraplanning role,” she explains.

Getting the message out there about apprenticeships as a way of gaining entry into financial advice roles is vital if the industry wants to narrow the advice gap and ensure there is a pipeline of new talent, whatever age that might be.

The main accountancy firms have long wooed university graduates with various entry level schemes, so the financial advice industry does have some catching up to do.

As Ms Treadwell observes: “Many students approach us with a fixed idea about a finance or accounting apprenticeship, a route which I think is easily understood as everyone seems to have an accountant or similar in their friends and family circle and, again, is a route easily understood by teachers and careers advisers. 

“But for the right personality, we quickly try to open their eyes to the variety and rewards of a financial services career, and individuals will often pick up on the appeal of helping someone else and providing advice and a solution to a problem as a worthwhile career choice.”

eleanor.duncan@ft.com