The FCA is stressing its rules do not put off new blood joining the industry, but seasoned advisers warn the growing complexity of the job and training costs continue to discourage young recruits.
Attempts made by Money Marketing to assess the demographic of the profession have been thwarted by a lack of crucial data.
The regulator, trade bodies and directories could not give hard figures on the age of advisers or say whether the industry is getting older or younger.
Last month FCA chairman John Griffith-Jones called for “more stock at the bottom of the pyramid”,saying good careers were on offer for modern, genuinely independent advisers. He said: “I would like to see the FCA encourage that. It is obviously not our job to be a recruitment agency but we must make sure that we do not do anything to impede the next generation moving into that industry.”
With a raft of new regulation hitting the sector in the wake of the Financial Advice Market Review, advisers say now is the time for the Government and the FCA to focus on how they can boost the ranks of young advisers.
Money Marketing’s effort to find definitive numbers of the age of the advice industry were held back by a distinct lack of information.
According to the Personal Fin-ance Society, the average age of all its members is 47 while the average age of members who have joined since March 2014 is 37. Those figures include Statement of Professional Standing-accredited advisers, paraplanners and students.
Specific data relating solely to the age of working advisers is harder to pinpoint, with neither Apfa, the FCA or adviser directory Unbiased.co.uk holding figures on adviser ages or at what stage of life people enter the adviser workforce.
Anecdotally, the average age of an adviser is in the mid-fifties.
The FCA publishes overall data on the average age of approved persons, which was 45 as at January 2015.
Advice training academies collate data on their own intakes. However, it is not clear if this is representative of people entering the market through other avenues.
“I have never known so many young people showing an interest in wealth management. They are saying it is a credible career to get involved in”
St James’s Place Academy director Adrian Batchelor attributes a lack of sector data to the fragmented state of the adviser market.
He says: “Who is going to be the body or organisation that will pull this together? The comments from the FCA chairman indicate maybe this is something the FCA itself may look to do.”
For SJP’s main academy – of which most of the intake is drawn from people embarking on a second career – the average age is 38.
In its Next Generation academy – which has a family focus and is often made up of the sons and daughters of SJP’s existing partners – the average age is 27.
SJP now takes on about 150 people through its academies each year and more than 200 people have graduated from the programme since it was launched in 2007.
Batchelor says demand for places is high and he is positive about the levels of interest in joining the advice market.
He adds: “I have never known so many young people showing an interest in wealth management. If you go back many years, that was not always the case. What is happening is the bright young people are saying it is a credible career and profession to get involved in.”
Elsewhere, Old Mutual Wealth chief distribution officer Richard Freeman is hoping to boost numbers at Intrinsic’s financial adviser school after “dwindling” membership since it acquired the business from Sesame Bankhall Group last year.
The school has a small cohort of students who are mostly graduates in their early 20s, with a few students in their 30s or older.
Many of the students will be sponsored through the course by the firm they work for and most will have been working for at least a year before they join.
Another cohort is due to start in June and Intrinsic hopes to have added one a month over the course of 2016, with between five and 10 students.
More than 100 students have graduated since the school was launched in 2011, about half of them in their 20s.
Freeman says: “We want to get members to a couple of hundred. That is a way off yet because we have got to make sure we scale the business. We have only just taken on the advisory school from Sesame Bankhall Group and the numbers have dwindled. We are now looking at a plan to boost that and we are hoping to get to pretty significant numbers in the coming years.”
Freeman wants to start focusing on recruiting from niche groups such as former military personnel. He says: “Where we are it is about how can we leverage relationships and I am particularly thinking the military and Help for Heroes.
“A career in financial services could be just what they want. It is not just around graduates, it is around people on their second or different careers.”
The fact those entering the market through academies are older than graduate level is seen as positive, given the soft skills advisers need, such as empathetic communication and building client trust, are the most difficult to master.
Apfa director general Chris Hannant raises a “grey hair challenge” in that those wanting advice have a tendency to seek the help of advisers that are a similar age to them.
But Batchelor says this can work in favour of young advisers entering the market.
He says: “There are more and more people needing advice and one of the challenges going forward is to get more young people to become clients earlier, and it will help to have young advisers because people tend to deal with people of a similar age.”
Progress on regulation
One barrier for new entrants is finding an advice firm that will invest in further training and development.
New Model Business Academy managing director Tom Hegarty says: “It is easy for a graduate to go and do a degree but then once they have got that, who will invest in them to give them the training and experience? The anecdotal answer is there are not enough graduates coming through. The FCA will want to try and do something to make it easier for people to come into the industry.”
Indeed, the FAMR report included several recommendations intended to loosen the requirements around adviser training.
One recommendation was giving staff four years, up from 30 months currently, to become fully QCF level four qualified to advise without supervision.
Freeman says FAMR could succeed in lowering the barriers to entry for the industry but warns advisers still face high Financial Services Compensation Scheme fees alongside the complexities associated with giving advice.
He says: “All that stuff the FCA is looking at as the background to FAMR will be positive, but we need to deliver on that work because it is still difficult to become an adviser and for someone to set up an advice firm.”