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Young blood needed

Jon Hopper, marketing and commercial development director for Openwork, argues the industry should invest more in new recruits and rely less on cannibalising existing resources

The Retail Distribution Review discussion papers have thrown open the debate on some key underlying industry issues that need to be addressed regardless of what is, or is not, taken forward at the end of the consultation period in December.

All the discussion around tiered advice will be moot if we do not first ensure we have secured a healthy stream of new recruits into the industry to provide that advice in the future.

Speaking at the RDR conference on 27 June, Sustainability Working Group chairwoman Jo Dawson, Insurance and Investment chief executive at HBoS, argued that steps needed to be taken to attract new recruits to the market and to help build value in a business. Her comments would have had particular resonance for a great many advice firms.

Ms Dawson made the point that “unless those involved in the retail distribution of investment products are able to build up real value in their businesses, whilst ensuring they have adequate resources to meet their obligations to the consumers they serve, we will attract neither the new blood nor the new capital that are both vital to the sector’s long-term viability and indeed the broader reputation of the industry.”

As a network of over 2,630 advisers and 750 firms we applaud the sentiment, even if we might not necessarily agree on certain points regarding the means by which the Working Group proposes to bring it about.

There is no doubt that as an industry we owe it to ourselves to invest more time and effort ensuring that there is a steady stream of young blood flowing into the market – and not, as seems to be the current norm, rely on cannibalising existing resource pools when growing a business. It is, of course, easy to see how the cost of recruiting and developing said new blood can put a firm off, especially when the firm runs the risk of the recruit being poached at the end of it all. This is an issue we must crack.

The review talks about primary advice being a “staging post” in the career development of advisers. Apprenticeships work well in other professions and we could apply the lessons learned in those professions to our own. We could structure businesses so that they can support junior staff joining with basic qualifications then provide the environment to develop and enhance them over time, working alongside more experienced advisers – old style mentoring.

The emphasis can be moved from the individual adviser being all things to all people to creating or growing existing specialist expertise at the most advanced levels of advice. Generalist advisers could refer to the specialists as required. In this scenario we would see a shift towards the advisory practice servicing the client rather than the individual adviser on his or her own. This would support specialism at the more complex end of the market which, in turn, could enhance the quality of advice given. Crucially, this model also has the potential to build much needed sustainability in the sector by supporting stronger entities which can attract and develop new blood.

A compelling argument for adopting such a model at the SME end of the market should surely be to secure potential successors to take the reins at retirement, particularly where there is no network guarantee to buy out the practice when the managing partner retires.

So if you want to focus on fixing the market, concentrate on the new blood. Create the environment to attract and develop it. This is one debate the industry cannot afford to let slide.

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