Ever since pensions freedoms came into effect in 2015, the pension and investment industry has experienced a tidal wave of transformation.
One of the inevitable consequences has been the increased need for financial advice: gone are the days when the vast majority of people chose an annuity to live on for the rest of their lives.
Now people have a choice. While the ultra-rich always had more complicated affairs and were used to seeking ongoing advice with drawdown schemes, it is the mass affluent who are suddenly needing more assistance.
Their pension funds might be more modest, but there is now more choice for these people too, and advice is needed throughout their retirement.
The number of advisers has increased marginally in recent years, to 26,311 in 2018 from 25,611 in 2016, but in 2011 there were around 40,000, according to the Financial Conduct Authority.
Ken Davy, chairman of SimplyBiz Group, says: “It’s a problem now because the number of advisers in absolute terms has reduced as a result of regulation, and many people would say that regulation has gone too far.
“I think that it is the overall thrust where the reaction of the regulators to every situation is to increase regulation rather than looking at how you can regulate more effectively.
“No one is saying, ‘We don’t need regulation’; it has an important role to play, like the Financial Ombudsman Service and the Financial Services Compensation Scheme, but it is the way in which it is being put into practice.
“It’s self-evident there are now only 10 per cent of the advisers that there were 30 years ago.
“The process to recruit an adviser is significantly more difficult than it used to be. I’m not saying we should relax the regulations, but we need to spread the message about what an excellent career financial services is.”
How to find the best advisers
So what do advice companies do, wanting to take advantage of an increased need for demand and respond to market forces?
In the past, the sector was typically staffed by tied salesforces – advisers trained by product providers to go out and sell products, which may have meant that customers might not have ended up with the right product.
Few would see this as a way to recruit advisers of the future, with many seeing the IFA (or relatively independent – restricted – advisers) as a far stronger model.
But with fewer advisers in circulation, (and with the same CVs coming up time and again), how are adviser businesses recruiting?
Some adviser companies are taking it upon themselves to do their own training – either from scratch, with apprenticeship schemes, or individuals who are some way along the route, for example, holding paraplanner status.
A few advisers are lucky to be well-known enough to be approached or to know of well-qualified people to work with.