MMI Leeds takes place on Thursday 11 May. Ahead of his appearance at the conference, Tom Hegarty – chair of the Financial Planning Apprenticeships Trailblazer, talks about how apprenticeships can benefit the financial planning profession.
Could the use of apprenticeships close the advice gap?
At the time of the implementation of the Retail Distribution Review (RDR) more than 10 years ago, we saw the number of financial advisers in the UK dip to its lowest-ever level of just over 22,000.
Since then we have managed to increase that number slightly, but most advisers now also have a limited capacity in the number of clients they can advise. Therefore, there is still a significant advice gap between the demand for advice and the supply of advice.
The outlook is also not so positive as the average of financial advisers is around 60, so there are many looking to retire over the coming years ahead, reducing the supply of advice even further.
The obvious solutions to solving the advice gap conundrum are mainly two-fold: increasing the number of financial advisers and utilising technology solutions to make the advice process more efficient.
Both of these actions would allow more access to advice for consumers. Many larger advice businesses have created their own academies to train and develop the next generation of financial advisers, but there are more challenges for smaller advice firms to grow and develop their businesses with new talent.
Apprenticeships in financial advice allow smaller firms to cost-effectively train and develop their employees to become fully qualified to the desired level and learn the knowledge, skills and behaviours to become financial advisers.
This means that the majority of the off-the-job learning can be outsourced to a training organisation who have the skills, experience and resource to do a more thorough job of this than taking up the time of the employer to do this.
Apprenticeships therefore could be a way of bringing new financial advisers into the sector and reducing the advice gap which exists today.
Why is the apprenticeship route to financial advice not better known?
It is a slight shame that government-funded apprenticeships have not yet become more prominent. The current system uses groups of employers, known as ‘Trailblazers’ to create new apprenticeships.
There are now around 600 different apprenticeships available in the UK across a range of sectors, ranging from intermediate level to master’s degree level. The Paraplanner Apprenticeship Standard was introduced first in 2015, followed by the Financial Adviser Standard in 2016, both of which are now offered by a number of training providers and have already helped and inspired a number of new people into these roles.
However, there have also been some challenges. Full completion of the apprenticeship programme is important, which demonstrates that the government funding is working effectively. However, there has been a tendency for apprentices to drop out of their programme once they have acquired their qualification benchmark, in order to focus on delivering advice.
This is short sighted though, as not completing the full apprenticeship is viewed negatively by the Institute for Apprenticeships and Ofsted. We need to make more of an effort to support apprentices all the way through to completion.
The employer should also recognise their role in the training and development of an apprentice, as although the training provider will deliver a proportion of the training, the employer needs to encourage, motivate and coach their apprentice as well as guide them on the more subtle requirements of the role and develop their behaviours.
If we can address some of these shortcomings with apprenticeships they should become more popular and more widely-used going forward.
Can the apprenticeship route make the sector more diverse?
The conditions to apply for an apprenticeship are very wide, although the financial advice standard is currently only available in England due to apprenticeships being a devolved policy.
To start an apprenticeship, the candidate would need to be over 16 years of age, living in England and not in full-time education. The apprentice would need to become an employee and then enrol onto a specific apprenticeship programme.
There have become fewer barriers to entry over recent years and so this route is really open to anyone regardless of age, gender, background or race. Apprenticeships are certainly a way which will support the financial advice sector to become more diverse and generating a wider talent pool going forward.
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