A detailed look at the firms driving job creation and the most sought-after roles
Advice firms are on the hunt for recruits, with 65 per cent aiming to add to their staff within the next 12 months, according to our latest research.
Our Adviser Market: Size and Structure report also found that nearly nine out of 10 (87 per cent) firms with more than £250m in assets under advice are hiring, making larger businesses the main drivers of job creation in the advice sector (see chart 1).
But the push to expand is not just in the realm of big players. Indeed, more than 70 per cent of firms managing £50m to £250m AUA are also wanting to bulk up staff numbers. The difference is in the roles they are looking to fill.
As chart 2 shows, the smallest firms are seeking more advisers (58 per cent) than non-advisers (42 per cent), because many are aiming to add AUA quickly. But as firms grow in assets, they are recruiting more support staff to service advisers’ growing client banks.
The largest firms are more likely to recruit across the board and may be more prepared to take on paraplanners and admin staff with the potential to become advisers.
The rise of the paraplanner
Nearly half (48 per cent) of all firms only want to recruit for positions such as paraplanners, business managers and compliance and admin staff. Paraplanners are the hardest to find and retain.
Paraplanners’ average earnings across the UK are around £38,000 – up 27 per cent from £30,000 in 2012 – according to recent research by recruitment consultants . London-based firms are having to offer paraplanners more like £40,000 to £50,000. For those paraplanners who see it as a natural path towards becoming an adviser, where the rewards can be much higher, there are increasing numbers of advice firms supporting this transition. More are providing the time and resources required to fill the adviser gap by encouraging this pathway.
Career path in sight
At a recent roundtable on the state of play in the UK adviser market, directors of both large and small firms told us they were seeing more young people choosing the advice profession, rather than falling into it.
Some harked back to the days when insurance companies were the main source of training for advisers. Today’s entrants to the profession have more choice, with recent announcements of adviser academies springing up in the past 12 months at firms such as deVere Group and LEBC. St James’s Place also boasted in its half-year results that it had recruited 95 graduates in the first six months of this year.
And these academies are not just for graduates. Many offer places to existing staff who want to become advisers. Unlike the insurance companies’ training programmes, they prepare their candidates for the solutions-oriented reality of the post-RDR world.
Employed advisers wanted
Another trend uncovered in the report is that almost two thirds of firms are only offering employed adviser positions. This figure rises to 88 per cent for large advice firms managing more than £250m AUA.
This is not surprising, given FCA Data Bulletin 13 showed that nearly half (48.9 per cent) of new advisers in 2017 were in the very largest firms with 50 or more advisers. Most of these firms tend to use an employed adviser business model.
We believe the employed model will dominate, as businesses take tighter control of their culture, processes and policies.
The tide may change if there is a sharp market downturn. A high proportion of advice firm revenue is directly linked to the firms’ AUA, so if clients’ asset values fall, adviser revenue will go down with it. Firms with the self-employed model (whose advisers are remunerated almost entirely on the basis of the income they generate) could turn out to be more resilient than those with the more fixed-cost model of employed advisers.
The job market for advice firms continues to evolve with the new structures and trading conditions. But while the position is improving, the restricted flow of new people into the advice profession continues to be a cause for concern.
|Chart 1: Advice firms intenting to take on additional staff in the next 12 months – by firms’ AUA|
|Intend to take additonal staff||63%||48%||69%||73%||87%|
|Do not intend to take additional staff||37%||52%||31%||27%||13%|
|Chart 2: Advice firms recruiting advisory staff in the next 12 months – by firms’ AUA|
Mariam Pourshoushtari is an analyst at Platforum. For more information on Platforum’s Adviser Market: Size and Structure report, firstname.lastname@example.org