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Warning sounded as 15,000 advisers to retire

Warning sounded as 15,000 advisers to retire

Warning bells have been sounded over a "huge recruitment crisis" in the advice industry with 15,000 advisers set to leave the profession in the next ten years. 

Octopus Investments has warned the much discussed advice gap was set to widen as its latest research showed almost a third of advisers, 29 per cent, expected to retire in the next five years.

This rose to 58 per cent of advisers when considering retirement in the next ten years. 

The survey of 205 advisers in the UK found an equivalent of 15,000 are expected to leave the profession - more than half of the current total of 26,600. 

The data is of a similar narrative to that published in Heath Report Three earlier this year, which suggested the delayed impact of the Retail Distribution Review could see one in five advisers leave the industry through planned retirement in the next five years. 

The Heath report surveyed 249 adviser firms representing 865 advisers on the current availability and future of advice in the UK and identified a five-year window following the introduction of RDR which had seen adviser numbers remain "static."

But the report warned this "Indian Summer" was now coming to an end and 7,000 advisers could exit the industry in the next half a decade.

Octopus Investments found 44 per cent of advisers surveyed were concerned about attracting new advisers to their firm, with barriers cited such as the high cost of recruitment and the lack of a structured pathway for students to access the profession. 

The biggest barrier to recruitment was cited as a difficulty in finding quality candidates, with more than two thirds of advice companies not having any advisers under the age of 30.  

Regulation has also created issues, with 68 per cent of advisers reporting Mifid II and RDR had made it harder to focus on recruitment. 

Ruth Handcock, chief executive of Octopus Investments, said the industry "desperately" needs more advisers and warned the sector cannot afford the advice gap to grow any wider. 

She said: "The encouraging news is that once people actually understand what it means to be an adviser, a sizeable proportion would consider it as a career. 

"This presents a huge opportunity for the industry and demonstrates that if we can work together to champion the profession and raise its profile, we should be able to turn the tide."

Zoe Dagless, financial planner at Addidi, said schools and universities were unfamiliar with financial advice as a career. 

She said: "As a profession we need to get better at saying what we do. Many of the traditional routes for entering the profession have largely gone by the wayside.

"But there is no set process to replace it. Financial advice is a great job and a great career. 

"You get to work with people from a wide range of backgrounds. It’s like the intersection between art and science. 

"You need technical background but it’s also about helping other people and it’s a well-paid and profitable endeavour."