What do Financial Advisors do?

Professional financial advisers carry out a ‘fact find’ with a client, where they ask detailed questions about their
circumstances, goals and how much risk they are able and prepared to take with any investment. Then they
ensure that any financial products they recommend are both suitable and affordable. Therefore, an extremely
important role given they are dealing with people’s money, investment strategy, protection and retirement
planning.

What are the benefits of obtaining financial advice?

• If you take an investment or protection product based on financial advice and a recommendation, you
should get a product that meets your needs and is suitable for your circumstances.
• Depending on the type of adviser you use, you might also have access to a wider range of choices than
you’d be able to access realistically on your own.
• Tax and retirement planning so you can ensure you are making the most of your money, spend
appropriately and have an eye on your retirement. This is especially important given Auto Enrolment
now happens without any real engagement with the individual.
• You also have more protection if things go wrong. For example, you would be protected should
unsuitable advice be given, or your adviser is found to have not acted in your best interests.

What’s the catch?

There are two sides to every coin of course and some may argue that paying for advice with no guarantee of a
return on investment is not desirable. If you decide to seek advice, then who would you choose to trust with your
finances? as its surely a much bigger decision than choosing a tradesman!

Many people may also feel that there are other tools available such as Robo Advice that enable you to obtain
guidance without paying the same sort of fees. Whether to seek advice or not could also boil down to the
amount you have to invest. The more money you have then the more you have to lose, so paying a fee for expert
advice, encompassing your whole wealth maybe more appealing. Others may have sufficient knowledge
themselves to do their own research and make an informed choice.

What’s the alternative?

For the basics such as ISAs, Fund selection, Protection policies there are many ways in which people can selfserve. There is plenty of information available on-line about the various products and Funds available that many people could read and make an informed choice. Then you have Robo Advice which with some information provided by yourself can make recommendations for a minimal fee.

However what cant be replicated today is whole of wealth planning considering savings, equity release, tax planning, inheritance etc and that’s where the real value add is for having Advice. Until systems are sophisticated
enough to be able to include someone’s full wealth then there will surely always be a place for an Advisor.

What does Kev think?

I asked Kevin Forbes (Chairman of the Personal Finance Society) for his views on this and here’s what he had to say:-

“Some people are good at self-investing, liberal and free flowing central bank policies over many years had led to a lot of people taking inappropriate risks but being rewarded – propped up by the quantitative easing and loosening of monetary policies. But this is just the thin end of the financial advice wedge. Lots of people talk about robo-advice, but that’s never going to replace a trusted adviser in my opinion. For many years I have teased my best friend who is an airline captain that computers are proven to be able to fly better than human pilots, but as he constantly tells me, ‘who is going to sit on a plane without any human handling the controls?’ it’s the same with your life savings and pensions and planning for the future, we will struggle to get the images of Terminator or The Matrix out of our heads. Plus, proper advice and planning involves art as well as science, a computer will never understand empathy or human behaviour, a good adviser does”.

Why be an advisor?

That’s a bit about what Financial Advisors do, so now let’s have a look at the benefits and challenges of being a
financial advisor: –

Benefits
• Unlimited earning potential

• Flexible working schedule

• Ability to tailor your practice

Challenges

• Working in a customer facing environment

• High effort & time needed to build client base

• Ongoing need to meet regulatory requirements

Qualified financial advisors start on £30k – £45k, Senior Financial advisors with an average client base can expect
to earn £60k and in a Wealth Division or major retail/private banks can earn in excess of £100k. There is clearly
money to be made in a career in Financial Advice and you don’t see too many poor advisors! So why aren’t more
people looking at this as a career option?

Where’s the youth?

Critically there is a significant lack of young advisors coming into the industry. The average age of a Financial
Advisor in the UK is 58, therefore there will be a high proportion of the Advisors working today that will be retired
in the next 5 to 10 years. One of the issues here is a lack of younger people coming into Financial Advisor roles.

This is partly due to a lack of understanding of the role/industry as it’s not covered in any curriculum at schools.
Whilst there are higher education courses that link to elements of Financial advice such as accountancy or law,
most people studying for these courses are considering a career as an accountant or a Solicitor.

From personal experience having attended Careers days at Bournemouth University and talking to Students it
feels like there is a real lack of understanding of what Financial Advisors do and therefore it isn’t something they
have ever considered. However, when you explain more about the role then you start to see the interest levels
rise and understandably so, as it can be a hugely rewarding career and I’m not just talking about financially.

Beyond the financial opportunity this really is about supporting people, providing your expertise to help them
realise their personal financial ambitions, which will also have much broader benefits to the client than just
money.

What’s the impact?

Unless we address the imbalance there will become a point where there aren’t enough advisors to service
demand and insufficient people to hand over businesses to when advisors retire, forcing customers to consider
other alternatives instead. Keith Richards (chief executive of Personal Finance Society), said: “Both the need and
demand for professional financial advice is set to increase but much more needs to be done to raise the profile of
financial advice in the UK to attract new talent.”

Help is at hand!

There are ways to help tackle this looming problem. A great example of this is Future of Advice (FoA), which is a
collaboration between Simplify Consulting (Wealth Consultancy firm), Personal Finance Society (PFS),
Bournemouth University and both FPWM and Strategic (IFA’s) who are all actively supporting this initiative.

FoA is about working with IFA’s in the Bournemouth area to encourage them to consider taking students for their
placement year. The benefits are that the IFA get a young and capable student who can bring a new set of skills
to their company, which with a bit of coaching and development can provide invaluable support. If all goes well,
they may consider coming back to the company or at least the industry after graduating. The benefit to the
student is that they get to work in a customer facing environment, gaining a better understanding of the role of
an IFA/Paraplanner and can consider this important role as a career, should they enjoy it.

Our engagement with Bournemouth University includes speaking to students who are looking at their options for
their placement year, to learn more about the role of an IFA, the support and development they can expect to
receive and what a career in Financial Advice may look like as an alternative to other careers they may be
considering.

Whilst how the IFA works with their Student and their development is down to the individual IFA, we as a FoA
team try to help and support where we can. A typical placement may include the following: –

New Placements

Month Activity
October FoA team attend Bournemouth University career day to talk to students looking at their options for their placement year to explain more about the role of Financial Advisor.
Nov-Feb Work with existing and new IFA’s who are interested in taking a Student and place job descriptions on the university portal.
Feb-April Firms conduct interviews and make offers.
June – Sept Placements commence normally between these months based on the IFA’s requirements. Placements are for a minimum of 9 months but can and often do continue for longer as the Student won’t need to return to University to finish their degree until the following September. Some students have stayed on part time during their final year too.

 

Existing Placements

Month Activity
August Induction Day (hosted by the FoA team) with various presenters from across the industry providing helpful insight into the wealth sector.
At the start of their placement Training and development provided by the firm on specific tasks they are required to support. For IFA’s who take students each year this is often provided by the existing student, with a one-month overlap, before they return to University.
Throughout placement Various Wealth training days – most recently Fidelity ran a training day aimed at improving industry knowledge.
Throughout placement You could study for relevant financial qualifications required for being a Financial Advisor, discounts are available for PFS members.

 

The scheme has been running since 2018, where 7 IFAs have taken 8 students, the feedback from
both of which has been excellent. Following the successful Induction Day in August 2019 supported by
LV=, Canada Life, Old Mutual Wealth, LGIM & Vestra, several other activities have taken place. Some
students have studied for and passed financial qualifications, attended seminars and training as well
as providing support to the IFAs in running their business through various levels of support.

Whilst FoA is in its infancy, the interest, success and positive feedback to date means that it is likely to
grow, with the same firms interested in taking further students again next year and more IFAs joining
the initiative. We have already sought agreement from Winchester and Southampton Universities to
advertise placements on their portals to help cope with the increased number of roles. The longer term plan is to expand into other areas of the country, encouraging other Universities and IFAs to
take part in this crucial and mutually beneficial scheme.

What does Kev think? (again!)

Kevin Forbes has been a keen contributor to this initiative, so I asked him about his views on the scheme and here’s what he said: –

“One of my proudest moments in financial services was to collaborate and set up the FoA program. An
opportunity to assist with the meeting of minds of progressive forward think advice firm owners, who
want to look after their clients for years to come, with younger energetic, well-educated and computer
literate young people from diverse backgrounds. There are several hurdles in the way for recruiting the
next generation of advisers, if this initiative can remove some of those barriers and assist talented new
people joining fantastic client centric firms, then I will be very happy. Imagine if every quality adviser
committed to replacing themselves with one or two (or even more) quality young advisers in their own
mould, what a brilliant profession this could be for many generations to come. What an amazing legacy
to leave behind to society! I’d hope that all advisers think they are a benefit to society, so if you do, why
not continue that work way after you retire, and if you don’t think you are a benefit to the wider
community then please get out of my brilliant profession right now and go and do something else!”

What can you do?

If you are a student who is interested in Financial Advice for their placement year or a Financial
Advisor who would be interested in taking a placement student, then I would love to hear from you.
Together we can help keep this important industry alive.

Article written by Matt Short, Business Manager at Simplify Consulting and Project Lead for the Future of Advice initiative