The advice gap could widen as financial advisers turn away prospective clients, while others prepare to leave the business, according to research from Octopus Investments.
A survey of 255 advisers from the investment business found 60 per cent of advisers had turned away clients in the past 12 months, while 62 per cent planned to retire by 2030.
According to the investment business, this highlighted an “urgent need” to attract more people into the industry.
Ruth Handcock, CEO of Octopus Investments, said: “The report’s findings are worrying, especially at a time when many people find themselves in a period of financial uncertainty as a result of Covid-19 and need advice. We need more not fewer financial advisers in the UK, but the good news is this is a problem we can solve.
“The evidence suggests that if we raise awareness of the profession and help more people understand what the role actually involves, the talent will follow. Becoming a financial adviser offers a rich and varied career, and an opportunity to help people achieve their life goals. We just need to get that message out there.”
Octopus found two-thirds (67 per cent) of advisers had experienced difficulties finding talent.
This was backed up by another survey from Octopus Investments, which found while 22 per cent of 1000 students asked had considered a career in financial advice, the “vast majority” had not.
Many of the students who had not considered a career in financial advice said they did not think their personality was suited to the job (39 per cent), while a quarter (24 per cent) said they did not want a corporate job with an office base.
But the research found when students were given more information about the role of financial advisers, 45 per cent would consider working in the profession.
Claire Limon, director of learning and acquisition at Openwork, said: “I think that ‘corporate’ perception comes from banks, as that’s typically the only interaction people have with financial services at that age”.
“I don’t think they really understand the industry and the fact that you’re potentially running your own enterprise if you want to, so it’s not corporate at all.”
Areas of opportunity
The report suggested there was an opportunity for advice firms to tackle the advice gap by shifting their focus on young talent, diversity and paraplanning.
This comes as the research found only 19 per cent of firms had a graduate training scheme.
Alan Marks, managing director at Harrison Spence, said: “Almost always, younger clients want their advisers to be a similar age.
“[Although] recruiting a younger adviser to attract younger clients might not always make sense in the short term, over time their wealth is likely to grow and they will come into an inheritance. This is what feeds your business and provides longevity – which ultimately adds value to it”.
One firm following this mantra is Kettering-based advice firm Telford Mann Pensions & Investments, which recently announced it was targeting school leavers and graduates as part of a recruitment drive in the aftermath of the coronavirus lockdown.