The Changing Landscape of Financial Advice: A Generational Shift

In the dynamic world of financial planning, a stark transformation is underway, shaped by the values and aspirations of different generations. Recent research and data from the Financial Conduct Authority (FCA) reveal a concerning trend: a significant decrease in the number of young financial advisers, particularly among Generation Z, contrasted with an increase in advisers from Generation X, hinting at a phenomenon of ‘unretiring’. This shift prompts a deeper exploration of the evolving landscape of financial advice and its implications for the profession and consumers alike.

The Decline of Young Advisers

As of February 2024, the FCA reports a 60 per cent drop in advisers under the age of 25 since August 2022, with only 174 individuals authorised to provide retail investment advice in this age group. This decline is not just a number; it’s a signal of the widening gap between the financial advice profession and the younger generation’s career aspirations.

Generation Z, known for prioritising employment with companies that align with their ethical beliefs and sustainability values, seems increasingly disillusioned with traditional financial planning roles. The perception that a career in regulated financial planning primarily revolves around product sales rather than genuine financial guidance is a significant barrier. The challenge is further compounded by the scarcity of opportunities for newcomers to engage in comprehensive financial planning, including critical aspects such as cash flow planning.

The Rise of Older Advisers and the Unretiring Trend

Conversely, the number of advisers over 60 has seen a 29 per cent increase, from 4,424 in August 2022 to 6,210 in February 2024. This rise, alongside the predominance of advisers in the 50-59 age bracket, suggests a trend of ‘unretiring’. Whether driven by financial necessity or the search for purpose and engagement beyond traditional retirement, older generations are returning to or remaining in the workforce in greater numbers.

This trend raises important questions about the sustainability of the financial advice profession. While the experience and empathy older advisers can offer, especially in retirement planning, are invaluable, the profession’s long-term health depends on attracting and retaining younger talent.

Bridging the Gap: A Call to Action

The data underscores an urgent need to promote the financial advice profession to younger generations, addressing their concerns and aspirations. Initiatives like the ‘Future Me’ tool and the involvement of Education Champions in schools are steps in the right direction, aiming to introduce young people to the world of financial planning.

However, to truly bridge the generational divide, the profession must evolve. This evolution involves not only adapting recruitment and training models to be more inclusive of diverse career pathways but also reimagining the role of financial advisers to align more closely with today’s ethical and sustainable values.

Conclusion: A Future-Focused Profession

The shift in the demographic composition of financial advisers is a reflection of broader societal changes. As Gen Z and future generations seek careers that offer both personal fulfilment and the opportunity to make a positive impact, the financial advice profession must respond proactively. By embracing ethical practices, sustainability, and a more holistic approach to financial planning, the profession can attract the new talent it desperately needs, ensuring its relevance and vitality for years to come.

This moment of change offers an opportunity not just for survival but for transformation. As we navigate this shifting landscape, the focus must remain on bridging the advice gap, fostering diversity, and building a profession that resonates with the values and needs of all generations.

Questions & Answers

Q1: What does the recent data from the Financial Conduct Authority (FCA) reveal about the demographic shifts in the financial advice profession?

A1: The FCA’s data highlights a concerning trend: a significant decrease in young financial advisers, especially those under the age of 25, with a 60% drop from August 2022 to February 2024. Conversely, the number of advisers over the age of 60 has increased by 29% during the same period. This shift indicates a growing gap between the profession and Generation Z’s career aspirations, while also suggesting a trend of ‘unretiring’ among older generations.

Q2: Why is Generation Z less inclined to pursue careers in financial planning?

A2: Generation Z values employment with companies that align with their ethical beliefs and sustainability values. Many view traditional financial planning roles, perceived primarily as product sales, as misaligned with these values. Furthermore, there is a scarcity of opportunities for newcomers to engage in comprehensive financial planning, including essential aspects like cash flow planning, which discourages their entry into the field.

Q3: What might be driving the trend of older advisers ‘unretiring’ and returning to the workforce?

A3: The ‘unretiring’ trend among older advisers could be driven by various factors, including financial necessity or a desire for continued engagement and purpose beyond traditional retirement age. Additionally, there is a greater demand for retirement planning advice, with older advisers often viewed as more relatable by clients in similar demographic groups, further incentivising their return to or continuation in the profession.

Q4: What implications does the generational shift in financial advisers have for the profession?

A4: The shift poses challenges for the sustainability of the financial advice profession, highlighting an urgent need to attract and retain younger talent. It raises concerns about the widening advice gap and the profession’s ability to meet the evolving needs of a diverse client base. Promoting the profession to younger generations and evolving the role of financial advisers to align with ethical and sustainable values are crucial steps to address these challenges.

Q5: What initiatives are being taken to attract younger people to the financial advice profession?

A5: Efforts to promote the profession among younger people include the introduction of tools like ‘Future Me’ and the involvement of Education Champions in schools. These initiatives aim to introduce young people to financial planning and help them plan a career in the profession. Additionally, there is a push to make the profession more appealing by highlighting the opportunities for ethical practice and sustainability within financial planning.

Q6: How does the Academy of Life Planning offer a transformative career path for Generation Z in non-intermediating financial planning?

A6: The Academy of Life Planning represents a pioneering path for Generation Z, keen on forging careers in non-intermediating financial planning—a realm where financial guidance is provided without the selling of financial products. This innovative approach aligns perfectly with Gen Z’s desire for careers that resonate with their ethical beliefs, sustainability values, and the pursuit of purpose beyond profit.

Empowerment Through Education and Support: At the heart of the Academy is our start-up support programme, designed specifically to empower emerging financial planners. This initiative offers comprehensive resources, mentorship, and a community platform, enabling young professionals to launch and grow their non-intermediating financial planning businesses.

Ethical and Transparent Financial Planning: Recognising Gen Z’s preference for transparency and integrity, the Academy champions a financial planning model that prioritises the client’s well-being over product sales. This approach not only aligns with their ethical standards but also provides a fulfilling career path that contributes positively to society.

A Community of Forward-Thinking Professionals: Joining the Academy means becoming part of a global community of life planners and individuals committed to redefining the essence of financial planning. It’s a space for sharing knowledge, experiences, and supporting one another in personal and professional growth.

Cutting-Edge Resources at Your Fingertips: Members gain access to state-of-the-art tools and educational resources that ensure they remain at the forefront of non-intermediating financial planning practices. From cash flow planning to holistic life planning, the Academy equips its members to meet the diverse needs of their clients effectively.

Personalised Mentorship for Professional Development: Recognising the unique challenges and opportunities that come with starting a new venture, the Academy provides personalised coaching and mentorship. This bespoke guidance supports members through their journey, from conceptualising their business model to navigating the complexities of the financial planning landscape.

A Movement Towards Meaningful Change: By offering a career path in non-intermediating financial planning, supported by a robust start-up programme, the Academy of Life Planning is not just facilitating professional development. It’s nurturing a new generation of financial planners committed to making a meaningful difference in people’s lives, championing a future where financial well-being is intrinsically linked to holistic life fulfilment.

The Academy’s vision and support system embodies a transformative opportunity for Gen Z, inviting them to be at the forefront of a shift towards more ethical, transparent, and impactful financial planning practices.

These Q&As provide a concise overview of the key points and data from the article, offering readers additional insights into the changing landscape of the financial advice profession.