Octopus Investments surveyed 205 independent financial advisers (IFAs) and found almost a third (29%) expect to retire within the next five years and more than half (58%) will leave the sector within the next decade.

This is equivalent to more than 15,000 financial advisers leaving the profession out of more than 26,677 that are currently in the intermediary space.

Octopus Investments chief executive Ruth Handcock said: “Financial advisers perform a vital role in our society, helping people to manage their money and plan for their future and families to reach important life goals.

“This is why we desperately need more advisers – we simply cannot afford for the advice gap to grow any wider.”

“This is why we desperately need more advisers – we simply cannot afford for the advice gap to grow any wider.”

The Octopus survey found more than two-fifths (44%) of advisers said they were concerned about attracting people to their firm.

This worry was reflected in the lack of younger staff currently at advice firms with more than two-thirds (69%) of advisers reporting that they didn’t have a single adviser under the age of 30.

What is happening?

There are a number of factors which have created a perfect storm: not enough new advisers are qualifying and entering the profession to meet demand, difficulty in finding quality candidates, no structured pathway for students to access the profession, high cost of recruitment, lack of awareness of financial advice as a profession and a perceived stereotype that financial advisers tend to be male and older.

The FCA’s latest report on the retail intermediary market shows the growth in the number of advising staff slowed to 1.4% in 2018 – not that growth in 2017, at 2.7%, was that spectacular.

Only the largest firms with more than 50 advisers successfully attracted new advising staff, with 4.6% in 2018.

Image change

There are solutions to the recruitment crisis in the financial advice arena, highlighted in another survey by Octopus.

Maybe the answer lies with an image overhaul for the industry.

Addidi financial planner Zoe Dagless said: “Part of the issue with financial advice is that no-one in schools or university has an idea about it. As a profession we need to get better at saying what we do.

“Many of the traditional routes for entering the profession have largely gone by the wayside.”

Also, if banks return to the financial advice arena, they will have the budge to recruit and train new advisers on a grand scale.

Platforum’s Mariam Pourshoushtari says: “Schroders Personal Wealth plans to hire 700 advisers over the next five years, with the recruitment drive already under way. Whether Schroders is successful, and whether more banks follow suit, remains to be seen. It could be a long-term answer to the shortage of advisers.”