Last year, employees across the UK voluntarily left their roles in unprecedented numbers, with resignations three times higher in 2022 than in 2021, according to recruitment agency Michael Page. What are the implications of the post-pandemic Great Resignation on the advice sector?
A good place to start is to look at adviser numbers. The Financial Conduct Authority has recently issued the latest advice market data for 2022 and puts the number of retail investment adviser posts across all firms at 37,381.
Half advisers are over 50, including 17% over 60. Just 6% are under 30
When the RDR was introduced in December 2012, adviser numbers stood at 31,132, so 10 years on we’re about 20% up. However, we’re still not back up to pre-RDR levels – in December 2011, there were an estimated 40,566 retail investment advisers – and compared to 2021, the number of advisers has risen by less than 2%.
It seems that although the number of advice professionals is growing, it’s not doing so at pace. To compound the problem, existing advisers are getting older. According to FCA freedom of information data from April 2022, half advisers are over 50, including 17% over 60. Just 6% are under 30.
Perhaps unsurprisingly given this age range, research by Octopus Investments in 2020 found that 60% of advisers expect to retire before 2030.
To continue increasing the number of advisers, firms need to attract more young blood into the profession. Unfortunately, that’s easier said than done. While the Great Resignation doesn’t appear to have had a major impact on the advice sector to date, research earlier this year by Michael Page suggests the trend is far from over, which may affect future recruitment and retention in the profession.
Half UK workers consider themselves to be active job seekers and a further 36% are considering a career move
It found that half UK workers consider themselves to be active job seekers and a further third (36%) are considering a career move.
Changes to the working landscape may also require advice firms to be more flexible to attract the best recruits into advice. Michael Page found that only a quarter (26%) of people are now office-based full-time, while just over half (55%) have a hybrid working model and a fifth (19%) are fully remote. For three-quarters (76%) work-life balance takes precedence over career success.
The number of advisers is important because it has significant implications on the ability of the sector to deliver regulated advice to all those who want it. The Lang Cat Advice Gap 2023 research found that around one in 10 British adults (11%) have paid for advice in the last two years, which equates to about 5.7 million. It highlighted, however, that 6.5 million more people would be willing to pay for advice, but think it is too expensive.
If we divide those advised client figures by the number of advisers, each adviser deals with 150 people on average. While many will have simple needs or require one-off advice, that’s still an extraordinary number of clients to manage.
If we brought down costs to encourage those willing to pay for advice to do so, the number of clients per adviser would reach 326
We believe financial planners, paraplanners, administrators and compliance people are crucial to the advice process. But we also believe many more people would benefit from taking professional advice and human advisers alone cannot solve the advice gap. If we did bring down costs to encourage those 6.5 million more people who would be willing to pay for advice to actually do so, then the number of clients per adviser would reach 326.
The answer has got to be a combination of humans and technology. Advisers add huge value to the advice by developing a human connection to build trust, provide reassurance, drive engagement and communicate complex information. Technology can support the process by streamlining data capture, automating administration, communicating basic information, collating data and providing insight.
We should all be doing what we can to encourage more talented individuals into the sector. But to really widen access to advice, firms need to make full use of technology in the advice journey. This will allow advisers to focus on the areas where they add the most value, while technology takes on the grunt work, so firms can deliver consistent, high-quality advice to as many people as possible.
Nick Eatock is chief executive of Intelliflo
