Tags: industry insights, Financial Services, Industry Insights...

​This is a frequently asked question during my dealings with IFA/Financial Planning firms. In the 20+ years that I have specialised in Financial Services recruitment there have been many varied attempts to provide a solution to this question , but now there seems to be a clear shift towards businesses developing their own planners.

TCF , RDR and MiFID II among other regulatory changes have driven changes to the industry for the better, not least the focus on businesses becoming better informed, more client centric and increasingly more conscious on the need to enhance the customer experience to drive retention of business and longevity/loyalty of relationships. It shouldn’t necessarily need regulation to effect changes to the way in which businesses treat their customers, but in some instances it clearly has.

That is not to say that all businesses have felt the need to instigate change. Continual improvement yes, but radical change no. There are some outstanding firms out there who have been getting it right way before TCF and RDR were even thought of, let alone defined. So, why did these firms get it so right? Well of course it goes without saying that the provision of high quality, holistic advice provided by well qualified financial planners goes a long way to getting it right, but as client numbers grow how do you ensure that all clients are treated fairly and with the same quality?

Recruiting new staff is the answer and growing them from within is utopia. But not all businesses have the necessary quality from within to grow and will come to specialist recruiter like me for a solution. Attracting an experienced Financial Planners remains an integral factor to the sustained growth and development of all Financial Planning businesses, but with the demand ever increasing at senior level and retention becoming more important than ever, firms are having to look at innovative new ways to achieve this growth when unable to recruit at the top level.

There has been a noticeable shift in the last 12-18 months particularly, of businesses favouring bringing talented individuals in at “Trainee Financial Planner” level, where they may have previously been looking to fill a more traditional Paraplanning role. In doing so, they are offering more direct exposure to experienced Financial Planners and the Financial Planning process, with a more defined and structured timeline in which they themselves will progress into a regulated role.

With businesses offering their developing talent more exposure to their experienced Financial Planners, and enabling their experienced Financial Planners to pass on their knowledge, they are better utilising the valuable resources they currently have, which is proving to be a very effective alternative plan for an ever-growing number of businesses.

Hiring a Chartered Financial Planner is not easy, and will not get any easier. Competition is fierce at the top end of the market - there is a finite number of planners in the talent pool and this number will decrease unless something changes. Reasearch has shown that :-

  • The average age of an IFA is now 50 years old and continues to rise every year.

  • Only 22% of financial advisors are under 40 (only 5% are younger than 30)

  • The total population of IFAs has decreased by 4.3% over the last decade

To regenerate the talent pool, developing an academy style structured training plan with a route to an IFA role is a way in which a number of regional and national firms have begun to address this issue. I cannot see why this would not continue to be the answer for some firms. Growing and mentoring your own mitigates the risk of a highly paid external planner potentially being recruited.

The structure and a commitment to the plan has to be right and has to be followed through. There is clear evidence that there are firms that are doing just that by recruiting the likes of:-

  • Level 4 qualified individuals with some exposure to the financial planning process

  • Paraplanners who want to be Advisers but have not had the opportunity to do so at their current firm

  • Specialist/niche planners , say DB or Protection specialists, who are seeking a holistic role

  • Telephone based advisers who want to progress into a holistic client facing role

Perhaps most importantly, the desire to become a holistic financial planner backed by one of the above is the most important characteristic to look for.

In my opinion, if businesses get this right, clients will see the benefit in more than one way:-

  • Staff retention and length of service will improve as employees become more invested

  • All customers will continue to be treated fairly and reviewed regularly

  • The customer experience will create loyalty, repeat business and referrals

I am conscious that the role of the Paraplanner and the role of an administrator are also crucial in delivering the service that creates loyalty too and can talk about that subject also. But for now I wanted to share my thoughts on the IFA market.

Happy to hear you thoughts and very happy to have a discussion with any firm or individual to compare or debate your views or discuss your plans.