Three quarters of advisers believe there is not enough new blood entering the industry to cope with future demand, according to recent research from Optimum.
Coupled with the fact the same percentage of advisers are planning to retire in the next decade, it really underlines the importance of advice firms focusing proactively on their talent pipeline.
When it comes to bringing new blood into the industry, there are three main routes firms can consider – modern apprenticeships, graduate recruitment and second careerists.
Growing your own adviser in this way can be hugely rewarding but it does represent a major commitment.
Firms need to carefully consider which route is most appropriate for them, weighing up the required investment of time, resources and budget.
Modern apprenticeships
Modern apprenticeships combine a qualification, usually a Diploma in Regulated Financial Planning or Diploma in Financial Planning, with on-the-job experience.
Nearly a quarter of those taking a modern apprenticeship are under 19 years old, so they offer a great opportunity for moulding and shaping young recruits according to the culture and processes of a business.
What’s more, a firm can design and oversee the internal training and development if they wish, to ensure it aligns with their specific business requirements.
However, it also tends to be the route that requires the biggest investment of time and resource, and, in the case of a relatively inexperienced school leaver, career progression may take longer.
A mentor or buddy system can add real value here, with the caveat being it’s a big responsibility and individuals fulfilling this role need to be carefully selected and know at the outset exactly what they are taking on.
Firms also need to bear in mind they have a legal obligation to give apprentices 20% of their working week to off-the-job training, which is ring-fenced and protected development time. With other routes, it’s at the firm’s discretion whether they offer paid study leave and how much.
On the flipside, the costs of qualification support are met by the Apprenticeship Levy (an industry-funded pot) in England and Wales and are generously supported in Scotland. The employer then pays the apprentice’s salary; however this is generally an entry-level salary and tends to be less costly than employing a graduate or second careerist.
It’s also important to note modern apprenticeships are open to both graduates and second careerists, but it seems there is more work to be done on promoting the benefits of this route to both these cohorts.
They can also be used for existing staff, so can offer a valuable framework for developing internal talent with support for the funding of their qualification.
Graduate recruitment
Recruiting a graduate straight from university can be a great option for firms who may need someone to progress a little more quickly, especially in the case of someone with a degree in financial services, for example.
University life can also embed practical and interpersonal skills that stand graduates in good stead, including working independently on tasks and to deadline, communicating and presenting complex topics clearly, proficiency with technology and being familiar with studying and taking exams.
Depending on their degree and where it was obtained, graduates who have completed their degree within the last 10 years can also gain credits towards their Advanced Diploma in Financial Planning.
It’s especially important with younger trainee advisers that employers focus on developing soft skills in tandem with technical ones, including things such as objection handling, navigating difficult conversations and active listening, to help them embed what older recruits may have developed via greater life experience.
It will still take several years for a graduate to become a qualified professional adviser, however, which can feel frustrating for some ambitious individuals keen to move on and progress.
According to the Institute of Student Employers Student Development Survey 2023, graduates have a lower retention rate than apprentices, so to help create focus and motivation beyond examinations, firms may want to consider mapping out what their trainee adviser will be expected to contribute to the business on joining, and how this will expand over set periods of time.
Second careerists
Research from KPMG UK shows almost a quarter of individuals looking to change career would consider working in financial services, indicating there is plenty of scope for attracting second careerists.
They generally tend to be older and often have the benefit of bringing plenty of both life and work experience with them, as well as a range of transferable skills. Again, this can be a good option for firms who need someone to be able to progress more quickly.
Changing careers is also not a decision that is generally taken lightly, so they are likely to be genuinely committed to making their new role work out for them.
A more mature CV may come with a larger price tag, however, so starting salaries can be higher.
A second careerist may also have more ingrained ways of working, that could make them less easy to mould than a graduate or apprentice. Depending on their previous career path, they may also be out of practice with studying for exams and need some more support with revision and exam technique.
For both graduates and second careerists who join without the formal framework offered by a modern apprenticeship, it’s important to have a structured and documented training and development plan in place to help them to build a support network within the workplace.
Firms wanting to grow their own next generation of advisers should carefully consider the pros and cons of these different routes and take time to decide what will work best for their business and client base.
Heather Ross is head of academy at Progeny
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