Recruiting advisers and other experienced staff ranks as one of the biggest challenges that advice businesses now face, according to many of the owners and managers of advice firms we have spoken to in our research at Platforum. In fact, we discovered that half of firms with over £1bn AUA ranked recruitment as one of their top five business challenges, according to our latest survey conducted for UK Adviser Market: Size and Structure.
Too few new advisers are qualifying and entering the profession in relation to the demand for advice. The FCA’s latest report on the retail intermediary market shows that the growth in the number of advising staff slowed to 1.4% for 2018 – not that growth in 2017 at 2.7% was that spectacular. Only the largest firms with over 50 advisers were successful in attracting new advising staff, with 4.6% growth in 2018.
Smaller firms are taking on trainees, but it is mostly the large businesses and networks that are in a position to undertake the sheer quantity of training new recruits to make a serious difference to the overall numbers. Several of them have set up academies that turn out hundreds of graduates each year, but that is still a small proportion of the numbers needed.
One widely welcomed aspect of the banks’ return to financial advice is the prospect of new advisers being trained up en masse. Pre-RDR, banks were well-known breeding grounds for advisers starting their careers, many of whom went on to run successful IFA firms. Schroders Personal Wealth plans to hire a significant number of advisers over the next five years, with the recruitment drive already underway. Whether it is successful in this initiative, and whether other banks will follow suit, remains to be seen. But it does provide a long-term answer to the shortage of advisers – not that the banks will necessarily see it quite like that.