The cost of practising as an adviser continues to rise but latest figures show advisers' average wages have fallen year on year. Is the advice business lucrative enough to attract new blood?
Latest research from recruitment firm BWD suggests employed advisers’ average total earnings for 2012 were £62,838, a fall from £66,281 the previous year. The figure is lower for self-employed advisers at £60,533. Is this enough to bring in the quality professionals the industry needs?
BWD highlights that it is vital for the health of the sector that average earnings for the adviser role are sufficient to attract a good flow of talent, particularly given that the bar has been raised with the requirement for a higher level of minimum qualification at QCF Level 4.
Let’s not forget, the £62,838 figure the research suggests is much higher than the national average wage. The average annual earnings of full-time workers in the UK was £26,500 in the year to April 2012, according to the Office for National Statistics.
Is £63k a year enough to attract new advisers?
This was a rise of 1.4% compared to the year before, but there was a cut in the real value of pay as inflation was higher during the same period, at 3.5%.
However, the average age of the adviser BWD surveyed was 42, with just 1% coming in under 30 years old. Relating this to the average earnings, most of those advisers polled are well established, undoubtedly tipping the earnings figures higher than if the profession was younger – entrants to the advice-giving world will not be earning anywhere near the BWD average.
Cost of advising
There are other factors. While advisers’ average earnings are in decline, most advisers agree that the cost of providing an advice service – taking into account complying with regulation, including the ongoing price of the Retail Distribution Review, and other costs such as professional indemnity insurance and funding the Financial Services Compensation Scheme – continues to rise.
According to Fay Goddard, chief executive of the Personal Finance Society (PFS), members cite regulatory costs as their biggest concern going into 2013, far above clients not wanting to pay for advice.
But then again, Goddard said she knows of at least one adviser who only works three days a week and earns about £50,000 a year – not bad for a part-time role.
So is the profession – and the attached salary – attractive enough to entice the next generation of advisers?
The PFS runs the Discover Fortunes programme, where it visits A-Level students and introduces them to financial planning as a profession. It has similar outreach programmes in universities.
Goddard said interest among the young people in joining the profession is high among those the PFS meets, and is increasing, so the signs are promising.
Financial planners failed to make it into the UK’s top ten salaries in 2011, according to the latest figures, (though brokers did, see box, left). But with university tuition fees of up to £9,000 a year in courses generally lasting three years, students could do worse than plump for a profession that could see them net £63,000 by the time they are 40 years old.
Salaries for the top ten UK professions in 2011
1 Directors and chief executives of major organisations £112,157
2 Corporate managers and senior officials £77,679
3 Aircraft pilots and flight engineers £71,555
4 Medical practitioners £69,952
5 Police officers (inspectors and above) £58,746
6 Air traffic controllers £55,352
7 Brokers (financial and insurance) £54,924
8 Financial managers and chartered secretaries £53,944
9 Managers in mining and energy £53,741
10 Protective service officers £49,394
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