To meet this year's challenges, IFAs will need to have the staff who can implement the regulatory changes and meet the requirements of stakeholder.
As a result, the employment market is “buoyant”, according to recruitment agencies. However, they also point to an increasing specialisation and professionalisation among IFAs.
The inexorable professionalisation of the IFA is also changing the kind of individual that employers find desirable. Darwin Rhodes financial services division manager Sarah Wells says: “The dem and is there for AFPC-qualified and experienced people with good people skills. Employers are looking for people who can build long-term relationships with clients rather than hard-nosed salesmen.”
Correspondingly, there is a diminishing reliance on commission and bonus-related pay in line with the move towards IFAs carrying out more fee-based work. As a result, IFA firms are looking for candidates who are professional enough to deal in the new fee-paying environment, says Options IFA division manager Nicola Hill.
Employers are looking for IFAs with an annual premium income of at least £100,000 but Indigo Selection manager Adam Byrnes notes a glut of “low achievers” on the market, perhaps an indication that API income has dropped.
He says: “Emp loyers have to lower their sights if they want to employ at all. Anyone over the £100,000 benchmark is, however, very marketable.”
Recruitment agencies say the FSA's inc reased diligence and the more onerous burden of compliance is resulting in considerable movement among compliance professionals.
While there is a strong demand for people with the requisite experience, some contraction in the market means there are also lots of people available.
Compliance Connections director Brian Harvey-Bussell says: “There is an awful lot of people being made redundant in the financial advice market, often from senior positions.”
He says people are willing to accept consultancy or contract work earning between £200-£800 a day, the higher earnings for those who advise on policy.
While compliance professionals are more and more sought after, many are leaving the high-pressure environment of the bigger companies.
In particular, they feel the heat following the fines that the FSA has imposed on some in the industry. These advisers are looking to move into smaller accountancy practices and firms of solicitors, which are seen as having a better record.
Byrnes says the with drawal of bonuses has encouraged people to look around.
He does, however, note that salaries have remained largely static.
Employers are only considering people with a few years' experience of compliance and, while at the mom ent there are enough people to go round, recruitment agencies predict that there might be a problem in the foreseeable future.
The increased regulatory attentions of the FSA are also affecting admin and support staff and most companies want FPC1 as a bare minimum req uirement for these staff.
Byrnes says: “Rec ruitment for advisers is difficult unless you have FPC3.”
The lack of flexibility on the part of employers is affecting the development of the advice market, making it practically impossible to recruit new blood.
The cost of meeting regulatory requirements falls most heavily on small firms.
Westminster director Peter Sutherland says: “Smaller companies in particular are looking to recruit, believing that a company has to be a reasonable size to be viable.”
As the launch of stakeholder approaches, recruitment agencies say people with pension experience are in unprecedented demand to meet the requirement of the scheme.
Frank Gaunt Associates consultant Dominic Gaunt says: “We have seen a lot of demand for people who can meet the demand that stakeholder will introduce.”
Salaries, though, are not increasing massively but Gaunt notes that organisations are prepared to pay for the right person.
………Kirsty Hudson finds that the lack of young blood coming into the ind ustry means experienced advisers are calling the shots more on salary IFAs and tied agents have taken control of the recruitment market and are driving up salaries.
The market is changing. A few years ago, employers had the power when it came to recruitment but the position has changed. The availability of good candidates is dropping and this is pushing up salaries.
Recruitment consultants say the salary for an IFA can be from £25,000 to £40,000. This is the basic wage many professional firms such as accountants or solicitors are offering when recruiting financial advisers.
Then there are the extras to consider, including bon uses and commission. Most employers also provide a company car as part of the package.
As the market is financial services, access to a pension scheme is also part of the package but the most important addition to basic salary is obviously commission.
Most employers operate a threshold where IFAs must earn three to four times salary in either commission or fees before any bonuses kick in. As you would expect, bonuses vary according to employer but are normally about 25 per cent of generated revenue above the agreed threshold.
Some advisers, however, get as much as 75 per cent but this is unusual.
Bonuses can also fluctuate according to the amount of business an IFA writes. Some systems operate on a small commission level for the first £200,000 and then increase it for any additional revenue.
There is still a marked difference in wages between an IFA and tied agent. The average wage for a tied agent is between £20,000 and £25,000.
Although tied agents often have similar commission or bonus packages as IFAs, some of the banks or bigger companies offer extra benefits such as subsidised mortgages and share options.
Recruitment agents put the gap between salaries for IFAs and direct agents down to tied agents typically not having to generate their own leads.
Employers' demands are also a factor in rising salaries. There is now more pressure for IFAs to obtain better qualifications. The best packages tend to be offered by the professional firms and they want the advisers' qualifications to reflect their own professional standards.
Recruitment consultants say AFPC is often required as standard by these operations. As the clients are fee-paying high-net-worth individuals, the partners want to ensure that an IFA will offer the quality of service the client expects.
The G60 qualification is also highly sought after by firms which want an adviser to focus on the pension market.
Location does not have a bearing on earnings for IFAs. Those in the South-east may earn slightly more than IFAs in the North but this increase represents the higher cost of living in the South.
Recruitment consultants say there is a shortage of good IFAs throughout the country and they are often able to choose between several job offers and can, to a certain extent, name their own price.
So, why is there such a shortfall of good IFAs? The industry is getting older – the average age of an IFA is 54 – and every year people are dropping out of the market. Recruitment consultants say the industry is not making enough effort to bring in new blood.
The industry needs to start attracting new recruits. Starting trainee sch emes and bringing in graduates is the only way it can survive. The industry will need experienced IFAs for guidance and training, making them even more valuable.
It will take several years and a lot of effort for the industry to find a happy medium of youth and experience and, during this process, IFAs should be able to reap the rewards with better salaries.