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JP Morgan predicts further 20% drop in advisers due to RDR

Jasper-Berens-700x450.jpg
JP Morgan head of UK retail Jasper Berens

JP Morgan predicts the number of financial advisers will drop by a further 20 per cent to under 20,000 because of the RDR.

Speaking at a Lansons Communications Future of Financial Services conference yesterday, JP Morgan head of UK retail Jasper Berens said the number of advisers has already fallen by 4,000 since the RDR was announced, with thousands more set to drop out in the coming years.

He said: “We believe 15 per cent of advisers have disappeared over the last five or six years since the RDR was declared, down from 27,000 to 23,000. We think that probably another 20 per cent of advisers will drop out of the market.

“But if you think there are 150,000 practising solicitors, 140,000 practising accountants and only around 20,000 advisers there is clearly still a strong demand.

“If any university leaver is thinking about a career then clearly financial advice is one they should be getting into. They are better qualified, more sophisticated, advice is in good shape and their interests are more in line with clients. It is one of the great success stories of the RDR.”

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Comments

There are 22 comments at the moment, we would love to hear your opinion too.

  1. I say, don’t you know I was already well qualified and extremely sophisticated prior to the RDR old chap.

    What tripe.

  2. ‘If any university leaver is thinking about a career then clearly financial advice is one they should be getting into’.
    Jasper; are you ‘avin’ a larff?

    If a bright eyed, bushy tailed graduate came to me and told me jobs were a bit thin on the ground but as luck would have it, he’d had 3 job offers;

    One in the flensing section of a japanese whaling plant

    One as a mortuary assistant at the local hospital

    and one as a trainee IFA

    I’d say
    ‘Well old chap, to me it’s a straight choice between the whaling station or the mortuary…..

    because a) you’ll find them a lot less messy to work in
    and b) if you go down the fin serv route, it’ll be YOU that’s laid out and gutted.

    Good ‘ere, innit?

  3. I guess it depends on your definition of success…

  4. But the FSA say there were over 30,000 advisers as at 31.12.13, so I find all these numbers being thrown around to be very confusing.

  5. Another 20% loss of IFA’s on top of the 23% plus 50% of bank advisers, the regulation fees for the remainder to fill the regulators black hole of costs may be untenable for many if the remainder.

  6. “If any university leaver is thinking about a career then clearly financial advice is one they should be getting into. They are better qualified, more sophisticated, advice is in good shape and their interests are more in line with clients. It is one of the great success stories of the RDR.”

    Where?

    Bank Assurance? – Don’t think so.
    Large IFA Practise? – Don’t think so.
    Self Employment? – Why?
    Join a Network? – Don’t make me laugh

    Just where are these university leavers (I call them graduates) actually going to go where they can make a decent living knowing what their cost base is going to be year on year? I don’t see it at this point because which company out there at the moment is taking on inexperienced advisers?
    It might settle down in the future but at this point this can hardly be lauded as one of the great RDR success stories.
    On one had he’s talking about a further 20% leaving the industry and on the other hand this is a great place to be. That’s got to be about as silly a statement I’ve heard since the last one.

  7. Yes, what a wonderful success – a 35% cull (in a lot less than 6 years by the way). The architects of which have all now gone from the regulator. Some Individual clients now being forced to pay VAT of 20%, many now excluded from ANY financial advice, more and more large players shutting their doors to the open ended liability of giving advice, a never ending increase in the level of (extra) mindnumbing paperwork being produced which is rarely read by anyone – certainly not the paying public. The only growth sector in Financial Services is the Regulator – they and their numbers/costs seem to constantly expand well above the rate of inflation – and we are forced to bear their ever increasing costs.

    In your very basic comparison with other professions you miss one fundamental point; People MUST pay for accountants at least once per year every year and people MUST use lawyers for certain things – they have NO CHOICE.

    When there were over 100,000 advisers (including tied and life co.agents) the general public were actually encouraged to save in a pension and have adequate life cover in droves. Yes some of the products were expensive but at least something was in place for the masses. That’s been fixed though as we now have auto-enrolment (i.e. tax businesses more to pay for pensions) and the wonderful MAS !

    20,000 advisers for a population of 65M ? Great job FSA, now largely the same people working at the FCA can blame the old regulator of course.

    Encourage my children to become an IFA – are you mad, banker (i.e.like you), accountant, dentist, doctor – or if they are entrepreneurial – property developer. If they want an easy 9 to 5 life, with no risk to them and a free ride on the gravy train, then target a job as a compliance officer in a city institution (i.e. if they have no imagination whatsoever).

  8. Stephen Rowland 18th April 2013 at 11:53 am

    I don’t know why anyone in Financial Services was surprised at these numbers – as anyone with half a brain could see that when RDR was first discussed the whole idea was potentially to get shot of Financial Advisers.

    After all – the treasury must feel that Advisers are doing them out of too much (tax) money & due to indebtness of most of Britain – where the majority needs to reduce debt – not many middle class clients need advice anyway! What a mess!

    Problem is most clients need more advice now (especially on reducing debt) – not less !

  9. That is only okay if the regulator enforces authorisation rules how many accountants and solicitors give advice within financial services without holding FCA authorisation. I’ve even seen solicitor websites offering wealth management services but when you check whether the firm is authorised and regulated with the FCA they aren’t.

    Clearly for authorisation in a post RDR world to work we need the regulator to enforce authorisation rules and to start convicting individuals and firms giving advice without authorisation.

    Instead of the regulator spending money on money advice service may be the regulator should be promoting the fact that getting advice from unregulated individuals is both illegal and potentially dangerous as you may not be covered by the FSCS.

  10. If the large banks and insurance cannot make money after RDR nor can small advisers. 20% will be the low end who leave as more and more realise that they will not be able to survive higher fees more regulation and clients unable to pay up front.

  11. What a load of tripe for want of a better word.
    Graduates should go for a job at the regulator , this is where the big money is, with no accountability whatsoever. Why would any bright young graduate open themselves up to lifetime liability, no human rights to speak of and a regulator who cannot leave you alone long enough for you to get on with your job. Not to mention a regulator which changes it’s mind every five seconds.
    Note to graduates reading this blog DO ANYTHING, EXCEPT ADVISE.
    Listen to Chris @11.11 am A job in a mortuary would be better.

  12. Assuming a popultion needing financial advice of 20 million this is a thousand clients per adviser.

    Dont about you but dont think I could carry out that many reviews a year.

  13. Two questions:
    Are we being honest? Is the analysis accurate?

    Honesty: Perhaps I have been mixing in the wrong industry circles, but hand on heart, how many advisers do you know with decent GCE (GCSEs) at O and A level? How many have gone onto higher education? How many have qualifications other than the much complained about Level 4? I know this sounds supercilious, but you only have to read some of the entries on the various blog sites to wonder at the standard of literacy, numeracy and comprehension in some cases.

    I know qualifications are not the be all and end all, but as a profession we are generally under qualified when compared to other industries or professions. It is not always a disadvantage, but we must be prepared to accept that those (such as the Regulator for example) who are generally well qualified see us in a poor light. (And yes, I do remember LTCM)

    Accuracy: I’m probably well above average adviser age – well known as an old fart – 68 NB. So if I decide to retire next year (heaven forbid!) – will these gurus put that down as another casualty of the RDR? If so then they will surely be talking out of their ear. There are several like me who may be aged, but have no great problem (nor have had) with the RDR, but we may all be approaching our sell by dates. (Yes I know, many think I have already passed that!)

  14. Harry Katz | 18 Apr 2013 12:23 pm

    Harry you make some fair points but I was fairly well qualified (and experienced) before embarking on a forced level 4 RDR qualification which for one part entailed me working out manual NIC calculations. They have actually invented computers, or do you think the regulator still uses quill and ink?
    When I joined the great unwashed in financial services the entry exam consisted of 10 questions and an interview. I was told I had the job the same afternoon subject to references. Of course we had to up-skill but making me spend weeks learning European Directives doesn’t really help my clients does it? I know this is a contentious point but experience does count for something as I’ve seen many a graduate come into this industry and fail spectacularly because the face to face bit and working long hours wasn’t something they were prepared for. I suspect not a lot will have changed and todays graduates are still as unprepared for todays financial services industry as they were 25 years ago, if not more so?
    I can’t see where any new blood is going to come from unless something changes fast.

  15. I predict that 99% of predictions are wrong. Including this one.

  16. @ Harry – I am inclined to agree with James I am afraid. I didn’t want to go to university, in part because I wasn’t sure what subject I would want to do. It seems many graduates still go to Uni for the lifestyle and come out with a degree totally irrelevant to the job they end up in.
    I have 10 (I think) GCE O=levels c and above and 2 A levels (I failed Pure Maths and I can tell you a story about how that happened which woudl prove that i was actually good at the practical application of the maths). after that most of my study was work relate with day release for Chartered Institute of Bankers Exams and as many Army courses as I could get myself on, which means my experiences by 25 were a lot wider than most graduates even if not as focused. i bought my first house at age 21 and had my first child at 24. I could have done none of that if I had gone to Uni FIRST. I may go later life, but to be quite honest WHY, what would it prove?
    When I joined the bank, you needed 4 GCEs (I had 10). I could have applied for a commission in certsain branches of the army at the time with 4 GCEs. I was in a service where you needed a degree (preferably in engineering), but when i went on my selection board for Artificer training was told to apply for a commission in a different branch, but didn’t as it wasn’t of interest to me and as a result remained a Sargeant for a further 8 years.
    Study should be relevant to the job you do and the job you want to do. We should not be forced to climb a slippery pole for someone else’s ego, there needs to be a purpose and a need for the end user.

  17. @James

    I accept your points. But I didn’t mean to imply that new blood would come from graduates. Indeed the very concept of graduates has been debased in recent years. Graduates of what? From which institution? A BSc in Macramé from the University of Oswaldtwistle is about as much use as a cycle for a fish. Many who enter (entered) financial services have done so after other activities (sometimes within, sometimes without financial services).

    New blood will always be there as business is subject to the laws of supply and demand. However I wouldn’t be surprised if before long accountancy and law practices realise that there is fertile ground in financial advice. This would be logical.

    Anyway this concern about new blood is a little disingenuous – most of us are concerned with our own businesses – but I guess may be wondering who there will be to carry them on.

  18. Most graduates believe their degree will enable them to walk into a top job, with a huge pay packet, long holidays, short days and golfing days.
    FS will never match up to their dreams. Joining FS is akin to working in a gulag.

  19. If adviser numbers drop to 20000 that will mean we are funding about 2000 out of about 3500 FCA staff!! Does that seem exceptionally high or an I completely missing something.

  20. “But if you think there are 150,000 practising solicitors, 140,000 practising accountants and only around 20,000 advisers there is clearly still a strong demand.”

    Difference is, clients usually NEED to engage the services of solicitors and accountants. For financial advisers, they often have to be SOLD on the idea and so either opt for the DIY route or bury their heads in the sand.

  21. Dermot O'Logical 18th April 2013 at 4:13 pm

    Anonymous | 18 Apr 2013 2:16 pm

    What makes you think most graduates expect to walk into a top job etc? Bit of a sweeping statement! I know a few former graduates in our industry, myself included, all of whom have realistic expectations and know full well that financial services isnt a path paved with gold (well for most anyway)…

  22. Three qualifications needed in this industry:

    The ability to empathise,
    The ability to communicate in a language people understand.
    Integrity
    and the ability to earn peoples trust.

    That’s four and as I said three at the beginning I don’t think you need to be able to count!!

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