It won’t be a revelation to anybody that the financial advice sector is in dire need of new blood in order to survive.
In fact, it’s been a consistent talking point throughout the two decades I’ve spent in this industry. I’ve chosen to write about the subject for two reasons. Firstly, we’re getting dangerously close to a crisis point, after which the replenishment of the financial advice pool on the scale needed will be almost impossible. Secondly, I believe that, for the first time, there is a solution on the horizon which may go a long way towards addressing the problem, in the form of apprenticeships.
Funding for the future
In the interests of total transparency, I’ll say immediately that I do have some skin in the game when it comes to apprenticeships. The New Model Business Academy, which is the not-for-profit training and development division of Simplybiz Group, was approved by the Skills Funding Agency in March this year as a training provider.
However, the subject of apprenticeships is important far, far beyond the scope of one provider, or even one industry, and I believe it is key to the health of the entire UK economy. In addition, I couldn’t use this column to push the benefits of the NMBA programme as an immediate option even if I wanted to, as a Government U-turn at the start of April meant that we, like thousands of other newly approved training providers across the country, are currently unable to take on and begin to train apprentices.
Thankfully, I believe that this period in limbo will be a relatively short one and the absolutely imperative work of training up the next generation of advisers will soon be able to get underway.
Lots of fish in the pond
There is a tendency to associate the word ‘apprentice’ with fresh-faced recruits, still shrugging off their school uniform as they enter their new profession. Whilst it would be fantastic to think that the benefits of a career in financial advice were being promoted well enough to attract school-leavers, there are many other sources from which apprentices might also appear.
The NMBA received over a hundred expressions of interest whilst putting together its apprenticeship programme, and the vast majority of those enquiries came from adviser firms that were already employing an individual and wanted to take that person to the next level in their career. This came as no surprise to me, as the majority of advisers working today didn’t follow a formalised, structured career or training path.
The breadth of skills and knowledge necessary for advisers is wider than that of almost any other profession, and many of those abilities were either innate or picked up through experience. Yes, the implementation of the RDR meant that all advisers needed to obtain qualifications of Level 4 or higher and, whilst it was a positive move to ensure that everyone had a certain status of technical understanding, how often do you use solely the knowledge gained through those qualifications in your day-to-day work?
Where can a new entrant learn about the people skills needed to build and maintain long-term relationships with clients, how to not only give the correct advice for clients in their current circumstances, but to create a sustainable holistic plan, understand different business models and evolving technology, know how to position and market a range of propositions and grasp the almost constant changes in regulation and policy that need to be implemented into their processes, if not on the job?
The end product ‘sold’ by an adviser may need technical knowledge, but the skills necessary to reach that point are wide-ranging, nuanced and complex.
Refilling the talent pool
So, why does it matter? Are internet transactions and the arrival or ‘robo-advisers’ not poised to make the financial advice profession in human form obsolete any moment now? Absolutely not. Technology is merely a tool which advisers can utilise to streamline their processes, or ensure that the financial health of clients is maintained in circumstances that don’t require one-to-one interaction.
Time and time again, questions have been asked about where the real ‘value’ of financial advice lies for clients, and we’ve received the same answer every time: clients truly value the face-to-face time they spend with their adviser above all else.
The continuation of professional financial advice as a service is vital and the number of advisers available to consumers cannot be allowed to diminish any further. Apprenticeships are the first viable option in a long time to replenish our sector and we must collectively hope that the Government is soon in a position to let new training providers begin their invaluable work.
In addition, as an industry, we need to start to work together to promote the attractions of a career in financial advice widely to the potential next generation of advisers, before it’s too late.
Matt Timmins is joint chief executive of Simplybiz