Administrative burden is preventing advisers from serving more clients, a new report from Octopus Investments has revealed.
The Bridging the Gap report found that six in 10 (60%) advisers turned away prospective clients in the past 12 months.
Meanwhile, just over a third (37%) of advisers said they serve “somewhat more” clients compared to five years ago, while 28% said it was the same amount, 18% said “somewhat fewer” and 7% admitted it was “much fewer.”
Of those with fewer clients, nearly half (48%) said the admin involved means they don’t have the time. Other reasons included preferring to focus on higher value clients and time being taken up by review meetings.
Octopus warned that many people in the UK will fail to get financial advice as a result of the advice gap.
In addition to advisers’ lack of time, there has also been a rise in the number of advisers planning to retire within 10 years (62%), the report showed.
To address the advice gap, more effort needs to be made to raise awareness around financial advice as a profession and encourage younger blood into the industry, according to Octopus.
Over two thirds (67%) of advisers said finding quality candidates was an issue, while 33% of advisers said a lack of structured pathway for students to access the profession posed a barrier. A quarter (24%) of advisers still believe there is a lack of awareness around the profession. At the same time, 20% of students who had not considered financial advice as a career said it was because they did not understand what the role entailed.
According to the report, the advice profession needs to take steps to change perceptions of the industry, with 64% of advisers believing financial education would help.
Ruth Handcock, CEO, Octopus Investments (pictured), said: “The report’s findings are worrying, especially at a time when many people find themselves in a period of financial uncertainty as a result of covid-19 and need advice. We need more not fewer financial advisers in the UK, but the good news is this is a problem we can solve.
“The evidence suggests that if we raise awareness of the profession and help more people understand what the role actually involves, the talent will follow. Becoming a financial adviser offers a rich and varied career, and an opportunity to help people achieve their life goals. We just need to get that message out there.”
Rohan Sivajoti, co-founder, NextGen Planners, commented: “The classic line from those who work in financial advice is that people say, ‘they fell into it’. We want to get more people who actually choose it as a profession because it is hugely rewarding work. That’s why we’re saying to advice firms, if there’s a university near you that you want to work with, let us know, and we’ll set up a bootcamp for you. From an employer’s perspective, you can go and meet all these candidates and cherry pick the best people from the day – and from a recruitment perspective it doesn’t get any better than that.”
According to the report, increasing investment in technology to improve efficiency and automation would free up time for advisers to focus on prospective clients.
The report also highlighted the need to work with the regulator more to enable a more flexible approach to providing advice and guidance.
Octopus says that many potential clients with uncomplicated needs would benefit from basic, low-cost guidance and a reappraisal of where the line is drawn between what is and what is not regulated advice could free up advisers to provide lower cost services to less wealthy clients.
