This is not about size as many smaller concerns have been busy working out their business plans and I have spoken with many small advisory firms which have been recruiting to boost their propositions.
Success does not equate with volume of advisers or turnover. Consider the case of one of the largest networks which collapsed last year because of an inability to get professional indemnity insurance.
Yet some tiny regional firms have brought in a profit and have got their proposition just right. Many have turned to technology, such as Skype or cloud-based services, to help reach a wider range of clients at a lower cost to them and the customer.
There is new blood entering the industry. Universities have signed memoranda of understanding with advisory networks to help boost the number of graduates seeking a career in financial advisory services.
National advisory firms have set up graduate training schemes or have helped paraplanners to obtain R01 and step up in the industry. And there are several instances of children who have grown up and are studying with a view to taking over their parents’ advisory practices.
Fresh talent is helping to stem the decline in the number of advisers and they join without any legacy or knowledge of how things were, which could be refreshing. It is a brand new start as this post-RDR world – a no-commission world – is all that they will know.
However it takes years to build experience and that experience is what often engenders trust. Without either of these things it will be hard for even the most talented and qualified young adviser to gain the confidence of clients.
It is that experience and trust that has been seeping out of the industry as advisers retire or seek a career outside financial services.
It is not all doom and gloom but if the regulator considers that RDR has instantly provided more people with better access to financial advice, it is grossly mistaken. The advice pool has shrunk and will continue to do so, even if it is at a slower rate than Ernst & Young prophesied.
RDR has reshaped the way the industry thinks and acts, boosted the perception of professionalism and created some natural evolution in the market.
Optimistically this could mean that although the talent pool is smaller in reach, it is deeper in knowledge and expertise and does things in a different way.
But whether or not it is able to serve the ‘70 per cent unadvised’ figure is a completely different story.
