The issue of recruitment in financial services is a pressing one. With many firms finding it difficult to recruit and retain suitable candidates, Money Marketing, in association with Envision Financial Services Recruitment, held a roundtable discussion to look at what is causing the shortage and what can be done to address the problem.
Spiers: We decided to change recruitment policy about four years ago. Until then, we had often used agencies or we had pinched people from other companies. Those people would come to us and spent a year with us before going somewhere else. It was a complete mess, really. There was something like a 70 per cent staff turnover. We then went into growing our own graduate recruitment. Since when we have recruited 36 graduates, all of whom have stayed with us and have gone on to AFPC and are all performing well.
Watt: Nick, is there a genuine shortage of qualified and experienced candidates?
Cann: Yes. The feedback from members and firms is that there is a lack of relevant experience within the marketplace. There is a lack of entry into the market-place for new people, whether they are graduates or otherwise. There are no clearly defined roles for people to look at or to make them desire a career in financial services and financial planning.
Watt: Adam, could I ask for your experience from the recruitment side? Are you seeing companies approaching you, asking you to find qualified candidates?
Maurer: There is a huge demand for qualified professionals and the ability to generate revenues right off their backs. There is less availability of people at the lower end of the market and few of our clients are willing accept graduates or trainees, so it does create a very genuine shortage.
Watt: It seems to be accepted that there seems to be a shortage on the advice side. Catherine, is this the experience in other parts of financial services? Is there a shortage of candidates in other areas?
Doig: I think that if you are trying to be a global player, everywhere is looking for talent in succession and the best market. It is always difficult to recruit the right person. My experience with hiring managers, whether with RBS or anywhere else, is that they are less prepared to compromise on anything. You need to fill a vacancy and you want the finished article. They want someone who ticks all the boxes, which makes it very difficult.
Watt: Michael, have you had a similar experience? Are you finding it difficult to recruit?
Whitfield: We are predominantly in the corporate sector, on the technology side. Both at graduate and at starter level, I think there is a paucity of graduate entrants. There are lots of people with 2:2s but very willing little of any quality above that. I believe they perceive the financial services industry as quite a low-level business to enter, and it a job of last resort – probably quite closely after recruitment, actually.
Harrison: Absolutely, yes. We are being asked increasingly to look at innovation, whether targeting people from parallel industries. If you look at sectors such as pharmaceutical sales, there are many redundancies with companies such as Pfizer losing many staff. As was intimated before, there is perhaps a credibility issue with financial services sales, particularly looking at lateral hires from parallel industries or from the graduate community.
Spiers: I think graduates will choose financial services as a career. We have no shortage of applicants for every position advertised because we work on local awareness. We put something in the paper once a month about our graduate scheme and some of our most successful people have turned down careers in accountancy to take financial services as a career.
Cann: If you look around the universities, financial services degrees are closing down because people are not seeing financial services as an aspirational career and are aiming above and beyond into accountancy, finance and those more traditionally glamourous areas.
Spiers: This goes back to your point that there is a big demand for people who can hit the ground running. Everyone needs to take a longer-term view.
Cann: Accountancy and other firms we are talking to are running career development programme into which to take people. They are not expected to go out and sell and they have avoided they need to go out and spend £6,000-£7,000 on irrelevant examinations they have already done and they can spend the money investing in skills, learning about the culture of the business, its clients and the expectations.
Maurer: The barriers to entry seem overwhelming if there are no organisations standing behind the graduates helping them through the process. A programme advertising quality opportunities with a path forward and job potential attracts considerable interest. However, without that, there are many careers in which you can make more money more easily. Compare people working in financial services with those in banking, walking around with million -pound bonuses, and the latter seems an easier track to take. We really need to map out the way forward.
Whitfield: I would say that approximately half of our staff have come through our graduate programme. When we surveyed those people, I do not believe any of them chose financial services as a career and the option of a banking job would have been prefer- able to entering financial services. Financial services is definitely seen as a poor relation. Financial services is in the same trough as it has always been, which is interesting considering the changes that we have been through.
Watt: Nick and Jim, are you seeing a problem with candidates coming forward if you are suggesting jobs in financial services? Is there a perception that financial services means settling for second best?
Tagg: I believe there are fewer companies offering the opportunity for training. Going back 10 years, Equitable Life, for example, would take policemen off the street or people from other professions. They would put them through FPC. That produced many good advisers who are now working in major organisations. I do not believe there are enough people in financial services offering the general public the opportunity to train for a career in financial services.
Constable: I believe that many of the barriers to entry are with the businesses looking to recruit. Where you have forward-thinking businesses which are well set up with systems and processes which allow them to attract and retain people, they unsurprisingly have fewer issues with recruitment than other firms simply trying to hit the ground running in a predominantly commission-based environment.
Spiers: It is short-termism. Our scheme is now self-funding although the first two years were a bit heavy. The first graduates of our scheme are now sales managers within three years and if you interviewed them, they would say that they are making more money from financial services than all their mates from university who went into banks or anywhere else.
Fife: How much of that do you believe is to do with your location? Are there other opportunities?
Spiers: We have little competition in our world. The competition is taking people to London, Manchester or anywhere else and we are successfully attracting people back to North Wales.
Constable: I work with an Australian man who was a practising financial adviser there until two or three years ago and what Nigel has just said mirrors exactly what that guy has told me. Five to 10 years ago, financial services firms could not attract a person away from accountancy, whereas accountancy firms are now struggling to recruit graduates because there are better businesses more able to attract that talent.
Maurer: We spend a great deal of time trying to help organisations improve their culture and other softer factors in order to attract the people one way or another but we are simply shifting people from one place to another. To attract the new talent and fresh blood into the industry, we need to remove the barriers and shepherd people through such that they not only achieve certification but they also have a place to work and they can see that right from the beginning of the process.
Tagg: There are no new names to refresh the pool of talent, that we are able to market out to the clients. There has to be an issue about what to do with the certified financial planning (CFP) qualified people coming over from Australia, who have done the job for a company in Sydney or Brisbane, for example? What organis-ation will look at that as an investment for the future? The answer is, not many, at present.
Whitfield: We recruited four or five people from that particular area and they proved to be hard-working and talented. The UK market is different from the Australian market. There are parallels in that their qualifications help them learn the discipline perhaps but not the skill set. I do not want you to think that we are recruiting only younger people but it is where much of our investment goes.
Porteous: I do not think it is about attracting because I believe people apply to everything, not just financial services. They target right across the board so you have raw material. There are pressure points: the point at which they first qualify and are showing promise. Do you promote them fast enough? If you do not and they are bright and talented, they will not sit around as a paraplanner when they believe they should be out seeing people.
Whitfield: In the London market, I think you just have to accept that there is a natural level of turnover that will happen over a period of time. We do not have a God-given right to keep them, as the employer. One of the things we talk about when people come into the business is: ‘I want you to have a really great time when you are with us. We know that you are going to be with us for three years. If it is for six years that is brilliant. If it works for 10 years, then you are probably certifiable.’ From my perspective, there is a turnover in salespeople. They do want to move because they get bored and they get stale.
Cann: It is exactly the same as the other professions but we are behind the curve in that we do not have that defined entry into the marketplace. If a person came up to you in the street and asked, ‘If I want to go into financial services, how do I do that?’, there would be a lot of coughing and looking at shoes and so on because there is no definition or clarity.
Harrison: Graduates make a finite number of applications because they simply do not have the time in their final year. There is such a pressure not to slip below a 2:1 while still job hunting. People typically make four to five applications each and much of it is what is front of mind and what is on the radar. Companies like PwC or Deloitte, which bombard the campuses as they do, and the likes of JP Morgan and Goldman Sachs will catch their eye and they will apply. If they do not understand what financial planning is, what they would do, where it leads and what the professional qualifications are , they simply will not apply. It is about making a statement and creating a profile on those campuses.
Watt: Do you find that when people apply to RBS, they know what job they are applying for and there is no shortage of demand because of that?
Doig: It really depends on their location; RBS is a massive employer in Edinburgh and RBS is plastered everywhere. In London, we are just another brand, albeit a large FTSE 100 company, yet still another brand competing with hundreds of comp- eting brands. I find it is completely different, location to location.
Watt: It has been said that the industry could do more to clarify exactly what financial advice is. What should the industry be doing? Is this down to firms, or organisations such as the IFP and others?
Cann: Organisations like ours have to lead on that by working with the marketplace to get some definition on what the roles are so that they can be advertised with some consistency. We have done some work on a competency profile with the global CFP involving thousands of financial planners in 20 different countries. The competency of a financial planner should be the same, be they in Australia, India, South Africa or China. They all need to know different things for their local marketplaces but their competencies, the way they behave and so on, should be the same.
Maurer: The problem is that we get the graduates with certification but nobody wants to take them on as staff. I worry that that is due to the lack of experience or concerns about the expense involved or the London market being concerned that I get them up and running and they go somewhere else.
Constable: This year, the third-year students from university will qualify with financial services degrees. They will go onto the fast-track CFP and they will be confident at CFP level, without experience. The accountancy firms have said they will have all of them because compared with what is currently available, there is no need to do CIA exams or any others.
Fife: IFAs tends to be much smaller businesses. The risk for an IFA when doing that is much greater than to a large accountancy firm. It is a different parallel to make. Maybe it is the scale of the IFA that is the issue.
Maurer: Right, which is exactly why they need to align together through an association or otherwise to mitigate that risk. It is the only way that I see we could develop this bulk training, to address the need for qualified people.
Porteous: It seems to be about the risk of getting it wrong and the financial implications thereof. At what point do we actually say there is perhaps something around giving the IFA some support in terms of their recruitment skills? Do these people know how to recruit and what to look for in people?
Constable: I think that part of the issue there is that, as has been said, graduates become bombarded yet do not understand financial planning.
Watt: Much of the discussion so far has focused on getting graduates in through training schemes. While that is the future for the long term, it does not really do anything to address the shortage of qualified candidates out there at the moment. Are there any other obvious examples that should be targeted for bringing more people into financial services?
Cann: You have to make it easy for people coming back to work or looking to change from existing careers.
Doig: The statistics all support that approach with people returning to work such as mature mothers or others, when you have been more flex-ible. The difficulty is convincing managers to take the lead and to be more flexible.
Dorman: What would be the paths for those back-to-work people? How long would it take to get back into employment?
Cann: It depends on what their qualifications are, where they are looking for and what qualifications are needed for certain environments. For a qualified accountant, a CFP is fine but if they need to be involved with regulations which require examinations, then there are many barriers to entry.
Doig: As opposed simply to qualifications, which obviously take a set time depending on the circumstances, someone returning to work is more likely to have more sophisticated interpersonal skills and customer awareness, which are things you may or may not get in a graduate.
Maurer: All these SMEs which need people now, how could they get together and address training and other needs? If you could recruit someone and deposit them into some form of training academy sponsored by a number of companies, are these opportunities of interest?
Porteous: A few people have come from such academies to work with us and there was no loyalty at all. For this company that invested in around 18 months of training, they stayed for 12 months beyond that.
Doig: A great statistic for an MBA is that people stay for something like six months after the MBA is finished. The company sponsors them all the way to America or wherever and they stay for six months beyond the close of the course.
Maurer: There must be a need for some compromise because if it is too expensive to do it yourself, then there must be a finishing point at which you could have the buy-in and take it from there. It seems that nobody wants to do it themselves, yet we keep harping on about the problem.
Spiers: It goes back to this short-termism. Everyone wants to recruit people who will hit the ground running, yet it is a very short-term view because those people run away again at the end of the year.
Whitfield: It takes a good year to get a consultant to produce a quality return. I understand that you have to be patient, to help them get there, while basically writing off the previous year. We know they are not going to produce any income for some time.
Dorman: It sounds like you are providing quite a lot of that development process. For people coming back to work or for other SME-type organisations, is the availability of soft skills training an issue?
Harrison: Focusing on soft skills in this industry, people say they have all the prerequisites and that is all taken as read but they do not have the softer skills required to succeed in business.
There is a really interes-ting piece of research conducted recently, with graduates coming to the marketplace thinking they know what employers want, which is hard work and dedication. In fact, employers want creativity, entrepreneurialism and all those things. There is a real mismatch there.
Watt: Is there an issue around presenting the positives about the industry?
Fife: I made the point that we are almost invisible. The top 100 IFAs were listed recently and the 100th best had a turnover of about £2m which gives an idea of the tiny nature of the majority of IFA businesses.
At that scale, they will not do anything other than they are doing at the moment. There could be something centrally led such as some form of cooperative idea. That brings plenty of challenges and I wonder who would sell it to the IFAs because many of them would need to be sold on it.
Constable: The industry clearly is not dying. It is thriving and changing so there is no underlying reason why nobody should enjoy it for some time to come. It is massively rewarding, both from a financial and from a job satisfaction perspective. There are so many positives, but there are also pockets.
Cann: Financial services degrees are closing down owing to the lack of links with the marketplace, which is ridiculous when we know of all the opportunities which are available. For the last few years, we have worked with some of the bigger employers to get some of that changed and it will be interesting to see 100 this year, 200 next year, and 1,000 the year after that.
All of a sudden, your supply chain is going up, so the confidence in the market rises. If you were sitting around this table in five years’ time, it would be a different conversation.