The advisory and wealth industries, under pressure from tech - which encourages more managers to retire - and a struggle to attract younger people into the sector has created a talent squeeze, a survey finds. Separately, industry group PIMFA said it accepted that the UK industry faces a problem.

Almost half of financial advisors and planners believe that the current shortage of IFAs and wealth managers will increase or stay the same over the next five years, according to a new study commissioned by Investec Wealth & Investment.

The top reason given for this shortage getting worse in the future is the rise of digital and tech wealth management platforms, forcing more IFAs and wealth managers to retire, the study reveals. This is followed by the industry struggling to attract enough younger talent (74 per cent).

Other reasons given for this talent squeeze in the future are the growing regulatory burden facing the industry which will force more IFAs and wealth managers to retire and the growth of artificial intelligence making some of the functions of wealth managers redundant.

The study shows that around one in five of UK adults with stock market-related investments have struggled to find an IFA, financial planner or wealth manager to help manage their investments over the past 10 years.

Nevertheless, the research, carried out among financial advisors and financial planners across the UK, shows that around half (51 per cent) of the respondents think that the shortage will decline over the next five years.

The study was carried out by independent research agency PureProfile, covering 100 IFAs and financial planners across the UK this January as well as Viewsbank, covering 535 UK consumers with stock market related investments.

“More must be done across the sector to make it an attractive career for new talent and, at the same time, firms need to ensure they have the right technology, tools and services to enable their IFAs and financial planners to focus on the aspects of the profession that really matter – delivering value to their current clients and having the capacity to take on new ones,” Simon Taylor, head of strategic partnerships at Investec Wealth & Investment, said.

PIMFA
“Attracting the next generation of IFAs and wealth managers is a key priority for our member firms,” Oris Ikomi, early career engagement manager at the Personal Investment Management & Financial Advice Association (PIMFA), a trade lobby for the UK wealth sector, said.

“We acknowledge the concerns raised in the report, however, there is a growing sense of optimism for the future, buoyed by concerted efforts along within the industry over the past three years to attract a more diverse pool of young talent,” Ikomi said.

“We believe that as an industry we need to make more effort to promote ourselves to young people and make it easier for them to learn about who we are and what we do. As a trade body, we have been making significant strides with our members in this area,” he continued. “For example, launching our Make.it campaign last year to challenge some of the myths, and negative perceptions surrounding the industry, [to] attract more young people from diverse backgrounds and create a sector that is more accessible.” 

“We will be running a series of initiatives and programmes this year and beyond to bridge the gap between young talent and the industry, starting with a virtual event on 4 March titled Breaking Barriers Forum: Empowering Women in Wealth Management and Financial Advice, in celebration of this year’s International Women’s Day,” Ikomi said. “We will be running more of these types of events throughout the year both online and in person, working with schools, universities and socio-mobility organisations across the UK.”