The Chief Secretary to the Treasury Mark Hoban recently said the RDR will attract new talent into the industry and I think there is some truth in that. It is not just the RDR in isolation but how the IFA industry is developing that is making it a more attractive career path.
Young people, particularly new graduates, want a clearly defined career path. I think the biggest contributor to that has been the introduction of chartered financial planner status. People can look at that and see it as a professional goal on a par with a chartered accountant or a solicitor.
The IFA industry has traditionally been a difficult industry to create a defined career path within because of the nature of the businesses. The fact many IFA businesses are sole traders or small firms means they aren’t necessarily able to support graduate schemes the way the big four accountancy practices can do.
It would help if people were able to understand some of their options as they leave university. I left only a decade ago, so I still just about remember. It was hard trying to understand what career paths looked like even after visiting lots of job fairs and recruiters. I more or less stumbled into being an IFA, it wasn’t exactly a planned thing.
Graduate recruitment is an opportunity for the industry. But smaller businesses must get value from every employee from day one. It is more of a challenge to bring in someone you must spend time training.
But I think there are valid routes through, particularly for small businesses, especially with paraplanning becoming such a clearly defined career path not for so many people.
It is great the IFP has recently come out with a certificate in paraplanning. This will help to define it as a career in its own right. The industry has had an issue with reputation in the past. But an environment where advisers work on a completely transparent remuneration basis and are properly qualified can only really reduce the chance of future misselling scandals. It can’t eliminate it, though you will always get rogues in any businesses. I read an article in The Times recently about two family law solicitors who were struck off for overcharging their client in a divorce case. It isn’t isolated to the IFA sector.
But anything we can do to improve standards will help the reputation of the industry, including the RDR, the new Consumer Financial Education Body and new regulator, combined with IFAs taking more of an interest in what their peers are up to as well.
We as IFAs have to be a bit more on the ball when we see examples of bad practice and must stamp on them. We don’t help ourselves out by letting them go unchecked.
Martin Bamford is managing director of Informed Choice