Advisers say digital wealth managers pushing them into retirement

Researchers working for Investec Wealth & Investment quizzed 100 IFAs and financial planners

Four in five advisers (81%) said they believe a key reason their peers are retiring is the competition from online wealth management services.

This is contributing to what some see as a shortage of advisers and financial planners.

Researchers working for Investec Wealth & Investment quizzed 100 IFAs and financial planners across the UK during January 2024.

Almost half (49%) said they believe the shortage will increase or stay the same over the next five years. Four in 10 (42%) said the shortage is set to increase, with around 5% saying it will increase dramatically.

Among those who think the shortage will get worse, the industry struggling to attract enough younger talent was pointed to as a reason by 74%. Growing regulatory burden was mentioned by 48%, and artificial intelligence making some functions redundant was also a common response (43%).

Investec’s researchers also spoke to 535 UK consumers with stockmarket-related investments.

One in five (19%) of these said they have struggled to find an IFA, financial planner or wealth manager to help manage their investments over the past 10 years.

The main reasons given for this were their investment portfolio not being big enough (41%), they did not think the ones they spoke to were very good (39%), the ones they spoke to were planning on leaving the industry or changing jobs (24%), and the IFAs or wealth managers were too busy and didn’t want to take on new clients (24%).

Simon Taylor, head of strategic partnerships at Investec Wealth & Investment, said: “It’s concerning that the current shortage of IFAs and wealth managers in the sector could continue, particularly when the impact of this is already being seen through future potential clients being lost simply because advisers can’t take on new business.

“More must be done across the sector to make it an attractive career for new talent and at the same time, firms need to ensure they have the right technology, tools and services to enable their IFAs and financial planners to focus on the aspects of the profession that really matter – delivering value to their current clients and having the capacity to take on new ones.

“As more and more clients move into drawdown, the burden of work on those IFA’s left will only increase,” Taylor added. “Working with a DFM to alleviate some of this burden can significantly help to deliver the much-needed capacity to concentrate on the financial planning needs of clients.”

Source: IA