The Financial Services industry has always been insular and dominated by a certain type of person, but how much is this hurting the sector?
A recent report is sounding alarm bells throughout the financial services industry as a “huge recruitment crisis” looms. Focusing on financial advisers, the report warns that the ageing and primarily male workforce is under serious pressure. Around 15,000, or 58%, will leave the profession is the next ten years, and 29% of the entire UK FA workforce are expected to retire within the next five. To compound this problem, 44% of firms are concerned about their ability to attract new blood.
“The biggest barrier to recruitment was cited as a difficulty in finding quality candidates, with more than two thirds of advice companies not having any advisers under the age of 30. ” – Octopus Investments Report, 2019
Growing old disgracefully
For a sector with average earnings of £78,000, it may be surprising to learn that just 9% of young people would consider a career in financial advice. A whopping 36% also say that they’ve no idea what a financial adviser actually does. Firms themselves are doing little to improve matters; 69% say they don’t employ a single adviser under the age of 30. Fewer than one in five say they have a graduate or training programme in place to support younger generations entering the field.
If younger people aren’t being brought in to replace the many retirees the sector is anticipating, how can stagnation and decline be avoided? To be clear, this recruitment crisis will affect every firm from ‘the big four’ all the way down to high street operators. If there are no graduates, no trainees or apprentice FAs sooner or later the bottom line is going to suffer, and it’s likely to be sooner.
A man’s world
It’s almost hard to believe, but 30% of firms still have no female employees whatsoever. None. Nada. Worse still, women make up around 20% of total FA employees, including administrative and back office staff. Just 14% of advisers are women.This under-representation is disheartening to say the least, and many comments on equality are sure to follow the report’s findings. With regards to recruitment however, this gender gap could be fatal.
It stands to reason that candidates wish to fit in in the place where they spend most of their day. If you’re a lone female in a boy’s club where everyone looks the same and is from a similar background, it makes for a pretty poor working environment. Furthermore, a well-publicised report found that the pay gap between women and men in finance is between 40-60%, and that for every £100,000 of bonuses paid to men in finance, women received £33,000. While this disparity may be the hangover of a bygone era which is soon to retire, getting more females into the industry might be a struggle due to a lack of role models, support and the knowledge that they’ll have to fight to be recognised as equal.
The future of finance
There’s no arguing with the facts: the dearth of new recruits to the financial services sector has to be tackled immediately. Diverse hires, whether female, young, from a different socio-economic background, differently educated or any other demographic you can think of, must be found. The sector’s future, and that of its clients, depends on it. But how can an industry with a fuddy-duddy reputation and a track record of being insular hope to attract fresh, exciting talent into the field?
According to Octopus Investments’ report, there are four main barriers at present: finding quality candidates (46%), lack of a structured career pathway for students (37%), cost of recruitment (31%) and lack of awareness of the profession (24%). Naturally, quality candidates won’t exist until awareness of the profession increases, as well as entryways into the sector. The cost of recruitment is likely to be high at present due to the death of available talent, and so each problem has created another.
Financial services firms must take a serious look at their internal talent strategies and create strategies for getting young people through the door. Talks in schools, university internships and even non-traditional apprenticeships would all help to bolster the talent available, and loyalty is often formed when young people have a great experience in a new environment. Opening up the industry to be diverse, inclusive and, above all, transparent, would go a very long way towards attracting the kind of people needed to stave off the impact of so many retirees.
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Content Marketing Specialist
Gianna has degrees in English and Marketing, and spends her days with Solutions Driven researching and reporting on the latest trends and recruitment industry insights.