National Mentoring Day – mentoring the next generation of financial advisers

National Mentoring Day – mentoring the next generation of financial advisers

Authored by Don Fraser on his experience of mentoring the next generation of financial advisers at Coventry University Business School. 

The average age of financial advisers in the UK is 56. According to a 2019 report from trade body Liberatum, 7,000 advisers could exit the profession in the next five years. That’s 21% of the existing number today.

At the same time as adviser numbers are in decline, the demand for advice is surging. In 2019 Baby Boomers (1946-1964) will be aged between 73 and 55 and account for 14.3 million (21.3%) of the UK population (Source: Aegon). Many of these millions will need pension, investment, retirement and estate planning advice, as well as guidance on gifting, equity release and long-term care.

This is an important supply and demand concern. Unlike Uber when it gets busy, advisers can’t appear from nowhere until the problem dissipates. It takes years to become qualified.

So as investments, and life in general, become ever more complex, it’s an issue you should probably be aware of.

Green shoots

It isn’t all doom and gloom. There is a younger generation of aspiring advisers out there. One of the key challenges they face is finding employment.

According to a study from the Financial Conduct Authority (FCA), the distribution of the total number of advisers across different sized firms  looks like this:

  • Medium to large firms (10+ advisers) 15%
  • Small firms (3 to 9 advisers) 30%
  • Very small firms (1 to 2 advisers) 55%

There are few firms that have the capacity (financial or otherwise) to take on young trainee financial advisers.

Today’s 50-something year-old financial advisers had plenty of employment opportunities way back when: work in direct sales, one of the large insurance companies, join a high street bank, or a discretionary investment manager (DIM). By 2019, the number of insurance companies and banks has fallen. Many of the DIM firms are being taken over and the number of firms is reducing. Direct sales has all but gone.

Mentoring university graduates

In 2017 I was asked by Lien Luu of Coventry University Business School (CUBS) if I would like to mentor some of the second and third year business school students and I leaped at the chance.

In January 2018 I joined a dozen experienced professionals to mentor 20 students.

My personal ‘why’ for volunteering was to give something back to the profession that had served me well for just shy of 40 years. I had been helped and mentored during my own career by a few individuals, but informally. CUBS was doing that as a structured programme.

The mentoring lasted for six months until June. Over the course of six months, there were three meetings at CUBS, involving presentations, workshops and talks. Between January and June, I held Skype meeting with my mentee.

Challenges

There were many challenges with mentoring. But life without a challenge or two quickly becomes dull.

There was a generation gap. Boomer to Millennial. We think and act differently. The education and employments systems have changed. The profession that I’ve spent almost 40 years of my life in has evolved and my mentees can’t replicate that exact journey.

Expectations were different. I spoke in decades; the mentees spoke of years. They want and expect to progress further, faster. Who was in the right?

The appreciation of the various roles in financial services – sales, advice, technical, marketing, compliance, operations etc. wasn’t there.

Writing a CV was a massive issue. The various ones I saw were brief and preoccupied with emphasising how great the student was, not how well-suited they were to a potential employer. This was an eye-opener for mentor and mentee alike. Another example was one of omission:

Let’s call my mentee Karina. Originally from Poland. Quite a bland CV. Expecting a 2.1 degree. The usual content. During one of our Skype meetings I asked her about languages; how many did she speak? Russian, German, Polish and English was the reply. Fluently. Not on her CV.

I asked her what she liked to do in her spare time. Playing the piano and the violin (neither were on the CV). To what standard? Orchestral came the reply. I have toured the world with my (German) High School she said.

Had she written any blogs? No, she said, but I have had a scientific paper published by my German university. I Googled it there and then. There it was. Not on her CV.

My next question was obvious – why didn’t you add all this useful information to your CV? Karina’s response was that she didn’t think an employer would be interested.

I explained to Karina that being multilingual set her apart from the crowd. Languages are difficult; her fluency showed she had persisted and overcome. These are excellent qualities to exhibit to an employer.

The same went for the piano and the violin; playing difficult instruments at an advanced standard spelt years of devotion and not giving up. Huge personal traits and yet more evidence in her favour.

Having a university-published academic paper was probably worth a mention too.

The outcome was good though. Her new CV was warmly received, and her next interviewer for a financial adviser role was a keen musician. Karina got the job.

In 2019 CUBS ran the programme again, this time with 45 students. I had two mentees this time. That involved a lot of evening Skyping. Similar journeys with talented individuals.

The main challenge in 2019 was to impart proper interview technique to each of them. There was a significant gap between what I expected and what was delivered, but we managed to close it by the summer.

The young doctor syndrome

Would a 60-year-old about to retire take pensions advice from a 28-year-old?

This is the perennial issue for young advisers. If you are reading this and are a young aspiring adviser, do consider joining NextGen Planners.

The answer is always – it depends. In California on my honeymoon, I became seriously ill with food poisoning and was taken to a hospital in LA. I needed a saline drip and morphine. Believe me, it was serious. The doctor who treated me looked my age (25), had long blonde hair and looked like a surfer (he probably was). Did I care one tick how old he was? No.

Still playing rugby union at the age of 48 I suffered a triple, open, compound fracture of my lower right leg. Surgery within a few hours. My surgeon looked like he was in his early 30s. Did I turn him away and ask for someone much older? Of course not.

How old is your veterinarian, your accountant, your solicitor? They don’t have to be the same age or older than you to be proficient and capable. The same goes for a qualified financial adviser.

Getting a foot on the financial services ladder

Everyone has a skill of some kind. Do you like numbers or people? Are you an extrovert or an introvert? Are you suited to large organisations like a bank, or a local small business? A good salesperson, or an efficient organiser?

If you haven’t taken the 16 Personalities profile, you can do it for free here. Learn about your strengths and weaknesses, and the ideal career path.

More and more enlightened firms are employing graduates in training programmes. These schemes are designed to impart to aspiring advisers the skills they’ll need in the role, as well as providing the opportunity to take the necessary qualifying exams. The trainees will take on an office-based support role (perhaps under the title paraplanner, associate or executive), helping financial advisers or investment managers in their day-to-day tasks.

Whatever happens, the profession will need thousands of qualified investment managers, financial advisers and financial planners over the coming years. As for me, I’m looking forward to my third year of mentoring young talent in 2020.

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