Nowadays, degree-level courses in financial services are offered by various colleges and universities, with growing numbers of students wanting places. The courses create academically qualified individuals with broad training in financial services. Yet, despite the ‘letters’ indicating that they are fully qualified, many are not ready to come face-to-face with real clients. Their academic knowledge, in the absence of practical application to specific situations, is no substitute for experience of the client-facing side of the business.
The Financial Services Authority (FSA) recognises this reality, requiring any adviser who deals with the public to be ‘competent’. Some firms’ interpretation of this is that advisers must have at least 12 months’ relevant experience and submit to some ongoing supervision. For new entrants, this raises the question of how to gain the necessary public-facing experience. The answer for many is either a major company’s trainee programme or entry to the independent sector as a para-planner.
First steps
A new entrant typically provides sales support to the principal, in the form of product research, money laundering checks, address verification and general paperwork. After the client meeting and the acceptance and implementation of investment or mortgage advice, they prepare the file, ensuring compliance as regards suitability documentation and the wider client relationship. This arrangement can work well as practice principals are sometimes poor at basic administration and therefore slower assembling a file than someone specifically tasked to do it. Also, the principal’s higher hourly rate would impact on any charge to the client.
In the course of this apprenticeship, the para-planner gains insight into the workings of an independent practice and ‘controlled’ exposure to the client-facing side of the industry. They progressively take on more responsibility and, with the required level of experience under their belt, they can progress to the role of adviser or, if it suits their skills and temperament better, advance as highly-qualified, specialist para-planners. I see this as a matter of ‘horses for courses’ and would argue that the industry needs both skill sets. I have seen AFPC-qualified people struggling as advisers because they don’t have the essential relationship-building skills.
Firms in our industry have had a tendency to poach the best-qualified advisers from each other rather than develop fully the skills of existing advisers or post-graduate recruits. In the long run, the winners will be those that don’t simply make increasing efforts to attract existing advisers from competitors. The future belongs to firms who build a long-term strategy of ongoing development, adding value to the adviser through an induction programme and developing the existing talent pool.
Striving for development
Creating an environment where advisers can develop into generalist or specialist senior advisers, or adopt a support role like para-planning, is something we should be striving for industry-wide. Backed by an ongoing development programme to help them get more out of their business, this can produce impressive results. Advisers are happier because it supports them and shows that you are taking responsibility for their development and not simply relying on product provider workshops.
The short-term attitude, historically rife in our industry, has meant that companies offering unsustainable margins increasingly woo a shrinking contingent of advisers. If financial services companies are to survive long-term, they have to look towards a new generation of adviser and be clear about how they are to be trained, developed and nurtured throughout their career – and even beyond. Yes, increasing numbers of advisers are looking to what lies beyond the rainbow.
At Park Row, we have a Practice Buy Out (PBO) scheme to provide existing self-employed advisers and new recruits with an eventual exit strategy. The PBO will give them the opportunity to retire from the industry and receive a fair market price for their client bank. The value of the PBO is up to four times the value of an adviser’s annual renewal income. Park Row believes the scheme will aid recruitment of graduates and other ‘new to the industry’ advisers, as the company will in future have ready-made client banks for them to inherit.
Kevin Paterson is sales director at Park Row Associates
