Anything you do to demonstrate your commitment to the future success of your organisation is likely to inspire confidence in your clients. They will see yours as a firm to introduce people to – especially those near and dear to them and probably of the next generation. But that demands coming to terms with the fact that just as you probably get on better and have more in common with clients of your age group, so younger people find it easier to relate to people in their own.
Historically, this is not something that this industry has paid much attention to. That must change.
It is estimated that 12,000 advisers are going to be retiring from the sector in the next five to 10 years. That’s a lot of valuable experience and expertise to lose. Too much. In fact, whichever way we look at the statistics, the average age of advisers in the UK always seem to be 54.
Two-thirds of advisers are already planning their exit. Yet I noticed that Bruce Wilson, the very savvy managing director of Helm Godfrey, was recently quoted as saying that advisers all too often miscalculate the value of their businesses. And this is a major problem.
Using multiples of trail commission is not enough on its own. The price that people are going to be prepared to pay for your business depends on many more factors such as the nature of the client base and its potential longevity and ability to produce revenue and the type, quality and age of the advisers.
I was at a PFS Hants & Dorset regional meeting two weeks ago when I was approached by two advisers, independent of one another. Both were interested in finding out about how best to bring their children into their businesses and if there was a tried and tested route in for them.
Advisers are so busy looking after their clients’ affairs and running their businesses that they have no time to coach people with little or no work or technical experience.
Even if they did have time, they questioned whether they had the right skills to conduct training.
We have to make the financial services industry an attractive profession for young people to join. It needs a higher profile and to do that we must engage consumers and promote the benefits of doing business with members of a professional body.
We have made some headway, but there is a way to go yet. We now have a structured route for establishing technical competence, working up from certificate to diploma and chartered status and this scope for professional advancement is something that students, graduates and post-graduates can recognise and appreciate. We already have a mentoring programme in place through the UK Careers Advisory Foundation but we need to do more. The industry must consider more ‘holistic’ training, in the form of developing general business and interpersonal skills.
If the Government wants to encourage people to accept responsibility for safeguarding their financial future at an earlier age, then this industry could also recognise that perhaps one of its biggest services would be to encourage young people to gain their understanding from the inside as practicing advisers.
Tim Eadon is chief executive of The Personal Finance Society