It seems for most of my career which now spans more than 30 years, the statistic for ‘The average age of an IFA’ has been a constant 57. As I passed through 57 in October – I was disappointed to think I had slipped over the well-established average age. Although possessed with my fair share of vanity, my disappointment was less to do with the fact that I am getting to be older in an old man’s profession, but more to do with the thought that the average had only dropped in all that time by only one year to age 56!
The question this prompts is:
“As a Profession, are we really tackling the issue of introducing more young people into it?”
Our practice, Elevation Investment Management – has grown in part through acquiring the accounts of Retiring IFAs.
The secret of secrets is that actually clients do understand that we as IFAs are also Mortal! They do actually expect that somewhere down the line, their IFA over perhaps many years, who has guided them with expertise will themselves be thinking of retirement themselves at some reasonable stage in the future. Indeed, I am sure it would be met with horror – if they found that their IFA had not themselves planned their own retirement.
When we have taken over a firm, we find clients expect naturally, that the incumbent IFA will be from the next generation. We find that clients gain comfort from knowing that they can plan ahead with an IFA that will be there for a number of years to come, and also perhaps from a generation that will be able to connect with their children on estate matters possibly more effectively.
There is also no doubt in the value of older IFAs to our client community. They will have seen the cycle of life many times. Bull Markets followed by bear markets. They will be not be quickly impressed by short term trends and usually possess a rich depth of perspective on matters to do with financial planning. Experience has a high value and place.
The Retail Distribution Review (RDR) 2013, provided a big opportunity for the profile of the IFA market to change and develop into a Profession from an Industry. It would also as a by-product, tackle the imbalance of age.
RDR delivered some hard-hitting changes in legislation which saw benchmark qualification eliminating, at the swipe of a pen, a significant part of the UK Advisory community. Commission on investment products was banned, replaced by fee-based advice. But with change, often comes opportunity. It is hard to now think that in January 1985, when I first came into the industry, it was possible to be a Policeman on Christmas eve and then, without qualification, be able to advise on important financial matters on January 10th!
Alongside the legal changes was a market place that has been changing, perhaps since the 1970s.
Historically, professional financial planning had been accessible through Stockbroking firms, Banks or Accountants. The market place for these providers were originally ‘Old Money ‘The man in the street had traditionally been served by the ‘Home Service Man from the Pru.’
The significant growth in the Financial Services Market – has been propelled by the growth of what is now described as ‘The Mass Affluent’ – this group is often described as educated people from a working or middle-class background who have been able to accumulate significant wealth sufficient to make them financially on the road to financial independence.
In order to measure the expansion of the Mass affluent market place – it is always interesting to see the growth of UK based client funds that appear on ‘Investment Platforms’ – the modern alternative to old fashioned insurance company policies, or indeed money hither to held by private banks or Stockbrokers. The market place has just passed through £520 Billion. In 2008 the figure was an estimated £100 Billion. The so-called baby boom generation, added to higher levels of education, social mobility and now mass inherited wealth are all contributory factors. The numbers will only grow.
The fact is more people need financial advice to protect their wealth and ensure that it meets their personal goals to support their future needs and requirements. Good regulation changes with the professional bar being set at a proper level – has changed the perception of consumers in the market. The IFA sector is now genuinely being seen as the next profession alongside its established contemporaries. Young people are seeing the opportunities that now exist in the Financial Services Profession which are now supported by the statistics.
So, with all of the changes and new opportunity, what are we doing as a Profession to ensure that our clients are supplied with a sustainable advisory service in the future?
At Elevation, as a part of our thinking around the 2013 RDR changes, we launched our ‘Elevation Academy’. Grand sounding in name but effective in delivery, the Academy was designed to bring young people into the business and provide a structure to develop their skills and qualification. Through promoting the academy to Graduates, non-Graduates with an interesting and relevant background, as well as early entry school leavers Academy product now serves 35% of our workforce. The National Apprentice programme has been great for smaller businesses who have been prepared to promote young people and invest in a structure. There are a number of great initiatives in the profession which provide relevant academic support for smaller firms to use which provide training and qualification. There is even now a new Young IFA organisation which our staff attend – that concentrates on financial planning issues for younger people – clients managing Student Loans and the use of modern technology in advice are two subjects that are current.
It is expected that when we bring a non-experienced young person into the business – we experience what we name the ’Hockey stick’. This means that for a number of months we get no return for considerable input- this level off – then we begin to see big moves forward. Talent, affinity with technology and energy that youth brings are all reasons why we are seeing the ‘dip in the stick’ getting shallower as we develop. Integrity and Trust are very important in the process. Young people need to feel that they are valued and work in an environment of personal trust. There are sad examples where this is not apparent which leads unfortunately to exploitation and disconnection. The agencies that support government initiatives gladly are trained to look out for these situations.
Moving into 2019 – Elevation is now beginning to see the harvest from the Academy programme. A full supply of fully qualified IFAs that are home grown has already come fully on tap. The programme has also supported young people in our business that have decided to specialise in client servicing and finance. Of course, it is important to keep a balance of profile – and we also work to develop our Senior Staff. Fully embracing with our experienced staff and products from our Academy programme will we believe ensure that our clients and staff alike see Elevation as being a home that will provide them with a sustainable and productive future.
Group Managing Director
Elevation Investment Management