Rebuilding the financial advice sector – from trust to attraction
In this article, Simon Hoyle takes a closer look at the financial advice industry and what he predicts will be a “supply-side problem”.
Reading it has prompted me to reflect on my own observations of the advice industry from a recruitment (and personal) perspective.
Over my more than a decade in recruitment I have been asked on several occasions to recruit financial planners.
The first was in 2008. I had already had some success recruiting service, sales and technical staff for banks and super funds and my recruitment manager at the time said: “Scott, we are sending you to the Financial Planning Association conference in the Gold Coast and you need to get at least 50 business cards and start placing financial planners”. This was a chance to get out of the office for a couple of days, learn more about the sector and meet some amazing people (one of whom was you Simon Hoyle!). “Not a problem” I replied.
In the 12 months that followed, the GFC had firmly hit and flawed a lot of people in the industry – advisers, practices and their clients. Sufficed to say, I didn’t have much success recruiting financial planners at that time and became distracted by setting up my own recruitment firm in 2009.
By 2010-11, the scaled advice model was beginning to thrive and existing major clients started to ask if I would recruit junior/associate advisers into their teams. I am pleased to say that this was a successful time to recruit these up and coming advisers, many of whom have gone on to become what I would consider “Class A” planners today. The refreshing aspect of recruiting these rookie advisers was that they didn’t come with bad habits. They hadn’t been exposed to the questionable old school ways of doing things, the product flogging, the churn, the borderline (and some times outright obviously wrong) ethical and moral decisions that plagued the industry. And the small percentage that, at that time, could convince me as to the importance of financial advice and why it needed a considerable uplift in professional stature, to that of a lawyer or doctor, were easily placed into roles and flourished.
At that stage, I did another round of research into creating a financial advice recruitment division of my then firm. My own poor experiences of trying to get my mother into the professional service of a consistently honest, ethical financial adviser put enough of a bad taste in my mouth that I abandoned the idea and continued to focus my recruitment energies on senior roles in super and investments.
And here we are in the middle of 2019 wondering what to make of the OPPORTUNITIES that are available in the post Royal Commission world. I have kept intact my relationships with some very senior advice professionals and am fortunate to have an exceptional team of advisers for my own personal affairs. Without requesting it, I am now being aksed for the third time, “will you help us recruit in the financial advice sector again?” Many of my most trusted advice professionals, while feeling like they’ve been kicked in the guts via the RC findings and their peers that did NOT consistently do the right things, believe that the opportunity to get it right has never been greater because there is NO CHOICE but to change this time. This is an exciting equation.
But, where are the advisers going to come from? As Simon points out in his article, some advisers (and firms) will go out of business because grandfathered remuneration will dry up and replacing that revenue will be too hard, timely and costly. Some will just leave the industry, in part for the bad taste in their mouth and in part because compliance will become too onerous. Some will retire early.
Advice is as important if not more so a professional service as the legal profession. Its standards must go up, and efforts to entice a new wave of up and comers must grow. I think it can all be reduced to one value: TRUST. Let’s get on with rebuilding it!