Some of the bigger advice firms have been slower to move when it comes to recruitment in a post-Covid environment, according to IFA recruiters.
During the pandemic many UK advice firms saw a decline in profitability through 2020 and a large number of firms implemented recruitment freezes - or making redundancies.
Data published last year by Fundsnetwork, which polled 100 advisers, found 36 per cent of advice firms had furloughed employees and 10 per cent had issued a hiring freeze in a bid to trim spending.
However, despite these difficult circumstances, Paul Harper, managing director of Paul Harper Search & Selection, said his firm has seen smaller firms act quicker in their recovery while bigger firms have lagged behind.
“With bigger firms, it's a bit of a mixed picture,” he said. “Larger firms have been slower to react as many were downsizing initially as the market turned. They have authorised replacements but are only just starting to recruit to higher volumes.
“The competition means financial advisers can expect to receive regular calls from headhunters.”
He said the larger firms are famously slow to move so when the pandemic hit, many didn’t act quickly.
“On the one hand, some really big firms have been cutting back for a while and they continued that through the pandemic,” he said.
“Smaller firms have responded more quickly to the up-turn. They have said that markets have changed and so we can too. They are ready to grow and are quite anxious to grow. There are also a lot of consolidators coming in buying businesses who are also anxious to grow because they have got money.”
FTAdviser spoke with other recruiters in the IFA market, who echoed this perspective.
Lewis Byford, co-founder of Antony George Recruitment agreed as he gave the example of one adviser his firm placed last year who left with £25m funds under management and he joined another small IFA.
“Bigger firms made some big changes even getting rid of their high performing advisers and letting them take their clients with them,” he said.
“What we noticed was that the firms that rely on new business to cover the cost of the staff performed less, for example larger businesses, where the small firms use ongoing adviser fees to cover the cost of staff and new business as a bonus. So when the market bounced back they were less affected.”
He said at his firm, he has seen people joining smaller firms, specifically 50 employee businesses and less, which this year “are growing like crazy”.
Meanwhile, Graham Hughes, IFA proposition director at Independent Resourcing Consultancy, agreed as he said smaller firms have been a “little nimbler” and could see the opportunity to pick up good talent that had been let go by some of the bigger firms.
He argued that the reason bigger firms had been slower to move was likely to be the cost factor during Covid in particular.
He said: “The first year expense for a new financial adviser with salary and benefits during an uncertain time was often seen as a pressure in the business. SJP have been far more active, but they had a long period with a freeze on recruitment when smaller firms continued to hire.”
Harper said recruitment was currently at an all-time high after a short period last year when there was no hiring.
He said hiring returned during the end of 2020 and increased rapidly during the first six months of 2021. “Current demand levels for specialist financial services staff and directors are higher than I have ever seen in the 22 years,” he said.
“We are seeing high levels of hiring from mid size and small financial planning firms but also the consolidators have moved quickly to hire advisers to look after client banks they have acquired from retiring IFAs who are selling up and leaving the market.
“Many firms are hiring directors to replace those who have retired or to support growth plans.”
Regional recruitment
Another trend that Harper pointed out was around regional recruitment and the difficulties that come with it.
Harper said: “I spoke to a couple of advisers in Cornwall who are struggling to hire because the advisers who traditionally retired to these areas, who made money in London and then moved there are now able to work remotely in London.
“If you look at the salaries in London against the rest, what's happening is the rest are catching up. Because it's no longer a premium to be based in London. Suddenly I can do it from elsewhere, perhaps cheaper.”
Other areas which struggled were Oxford, Milton Keynes and East Sussex, he said. With high employment in these areas, he explained that they are seeing attrition rates running high too.
He explained that the reason for this is because many financial planners no longer expect to spend five days a week in the office. Instead, they are balancing home and office working and feel they can relocate to Cornwall and other rural locations without needing to move firms whereas traditionally they would seek to join a local firm.
“It can be difficult to retain good staff,” he added. “North of the border Aberdeen is particularly tough with a distinct lack of qualified talent. The standard was very high but as an industry we do not have enough young talent coming through. We need more firms being prepared to take on and train young talent.”
Hughes agreed as he said it is not easy to get the right talents around there, which can be quite difficult. “You can have a a good role in the wrong place, and it can take a lot of time to find the right person,” he added.
However, Byford said these areas have always been difficult to recruit, even prior to the pandemic.
He said: “This has never changed in six years, these areas are always hard to recruit, the same as Scotland. We no longer recruit in these areas for that reason.”
The new normal
Felix Milton, a chartered financial planner at Devon-based Philip J Milton & Company, said his firm had to furlough two staff at the beginning of the pandemic, though this was on the request of one employee who needed to look after her toddler at home and was unable to work while doing so and someone who had only joined very recently and couldn’t be easily trained remotely.
“We didn’t have a hiring freeze though and actually have seen that we’re really struggling to employ the staff we need due to the expansion of the firm’s client base during the pandemic,” he said.
“We have been advertising for staff consistently and there just doesn’t seem to be the same number of applicants out there. It may well be that furlough is keeping some from applying for new jobs but as that ends we hope that we will start to see an increase in the number of CVs received.”
sonia.rach@ft.com
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