A report by Intelliflo, entitled Growing your financial advice business – the hybrid model, found hiring of new employees was a key issue for advisory firms with ambitions to grow.
The study stated: “Recruitment is a major challenge for advice firms in the UK today and remains hugely important to the growth of many businesses.
“Attracting, and keeping, the right personnel has arguably never been more important or more challenging. Such has been the pace of change over the past decade that advisers need to be more highly qualified than they have ever been before. This has resulted in something of a dearth of available, qualified candidates to recruit.”
Chris Johnston, managing director of JohnstonGreer, a recruitment specialist in the financial advice industry based in Scotland, said: “There are fewer candidates available and, coupled to this, there are few vacancies available.
“Financial advisers are asking more from the firms they work for and the firms are asking more from their advisers. When I started out in this industry 20 years ago there were a number of direct sales companies that employed thousands of people and it was a volume industry.
“There were high quality wealth managers around 20 years ago, but the industry is far more focussed on this end of the spectrum these days. There is a much higher demand for quality recruits now which makes recruiting more challenging.”
Some 37% of 100 users of Intelliflo’s Intelligent Office told a survey that recruitment was an issue, as was the lack of resources to train existing employees (38%).
Steve Preston, managing director of Heat Recruitment, recruits for the financial advice industry in Bristol and London.
He said: “There are still candidates for adviser roles, although this is becoming a much tougher market as firms only look for qualified professionals to fill their vacancies and there is a shortage in the number of qualified people at present.
“The rules and regulations in the industry are changing rapidly. QBE (qualified by experience) is worth significantly less in today’s financial services market because of regulation.
“The standards are now a lot higher. You may well have worked in the industry for 20 years, but without the requisite qualifications, it means nothing.”
“The best candidates are being snapped up by the more competitive firms that offer more.
“And those firms that are taking a more proactive approach to recruitment are faring much better than those who are waiting for the perfect candidate to fall into their lap.”
He added: “I believe that the salary level within the industry is fair at the moment and is not an issue in the majority of cases.”
He expects the number of graduates entering the industry to rise in coming years, with increasing number of university courses are including Financial Planning modules.
However, he said: “There again, many firms will not take a gamble on a graduate with a good degree as they have no experience. This creates an obvious Catch 22. Some of our clients recruit graduates, but not many.”
Mr Johnstone said: “Those that do, and I’m only talking about a few firms here, look to get graduates into the business and train them up. So they start as administration staff, move up to Paraplanning and then possibly become advisers in the future. This is a great way of doing things, but it doesn’t happen very often.”
Abbie Knight, director of DISCUS, a consultancy that works closely with financial advisers, said many people just fall into a career in advice.
She said: “That needs to change. There is certainly a lack of candidates available to the industry right now. We need more tie in with university courses to promote financial advice as an industry in which you can build a career.”
The white paper is available via Intelliflo's website.