The financial advice sector is facing an extensive skills shortage and the ability to recruit new people is being constrained by the cost of regulation, according to a report from the Financial Services Skills Council.
A survey of 279 employers in the financial advice sector reveals 81% claim to be facing recruitment difficulties and 72% cite skills shortages as the reason for this.
According to the skills needs report on sector skills needs, firms attending FSSC employer forums said the nature of an IFA’s work necessitates extensive experience and knowledge of products and services, while regulation imposes significant costs around the need for relevant qualifications and compliance requirements.
The report states: “The tendency to recruit new people to cope with the workload is constrained by the steep costs of such hires, and employers often prefer to poach already qualified staff rather than develop their own.”
More than two-thirds (68%) of employers report difficulties in recruiting professionals and technical staff, but less acute problems are reported for school leavers and graduates who the report says “do not concern the sector to a great extent”.
The FSSC says the sector’s preference for hiring externally rather than developing employees is taking its toll, as the lack of qualified employees is cited as a recruitment difficulty by almost twice the number of employers (63%) than competition from other employers or industries (33%), indicating the pool of qualified staff is not growing in line with demand.
It adds: “The leading cause of concern for employers, however, as for the rest of the industry, is the lack of skilled and experienced people in the labour market. A further, though less well-documented, source of skills shortages is the alternative of self-employment, which is always open to successful financial advisers who have the appropriate experience and qualifications.”
A separate report from the FSSC on training and education reveals between September 2005 and September 2006 the financial advice profession witnessed an increase of 231% in long-term care insurance qualifications, 57% in pension qualifications, 160% in tax planning qualifications and 191% in corporate qualifications.
More than 80% of financial advisers hold the certificate in financial planning (CFP), 30% hold the certificate in mortgage advice and practice (CeMAP) and 20% to 25% hold the advanced financial planning certificate (AFPC) and the G10 (taxation and trusts) and G60 (pensions) units.
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