John Somerville, Director of Financial Services at LIBF, explains why the financial advice sector, and society more broadly, can benefit from an increase in the number of younger and more diverse financial advisers
The financial advice sector faces a critical transformation: it must become more accessible to both potential customers and future professionals. According to research in the 2024 Lang Cat Advice Gap Report, only 9% of the UK population currently accesses financial advice, despite 30% expressing interest, highlighting the pressing need for the industry to adapt to bridge this gap.
The challenge of diversity
The financial advisory sector is in a diversity pinch. It struggles to create meaningful opportunities for younger and more diverse talent due to systemic barriers, which reflect wider patterns seen across financial services and technology. But this isn’t just a problem for aspiring financial advisers or HR teams. It’s also a strategic challenge that undermines the industry’s ability to serve an increasingly diverse client base.
The barriers are both structural and cultural. Traditional pathways often demand substantial investments in time and resources, which can deter diverse talent from entering the field. Small advice firms, which make up over 80% of the industry [www.moneymarketing.co.uk/analysis/sector-snapshot-the-shape-of-advice-firms-in-2023/], have also historically hesitated to invest in training new recruits due to the perceived risks and costs of upskilling. When they do invest, there’s an ongoing concern about retention: a fear that newly-trained advisers may leave after gaining qualifications.
At a time when some companies are reviewing their diversity, equity and inclusion (DEI) initiatives and polices, it’s vital that the financial advice sector takes sustainable, measurable approaches that focus on tangible outcomes and create more inclusive pathways for diverse talent.
Developing technical skills is not the only hurdle. There’s a persistent perception that younger talent could struggle to connect effectively with seasoned professionals and older clients, particularly in areas like investment management where trust and experience are paramount. This creates an additional barrier that goes beyond formal qualifications.
The industry must address these challenges holistically, combining targeted recruitment initiatives with structural changes to education and career development pathways. Success in this area requires not just commitment to diversity in hiring and retention, but also creation of inclusive environments that support long-term career growth and development for professionals from all backgrounds.
Transforming education pathways
Modern solutions can help address these challenges. In particular, the rise of flexible qualification pathways marks a significant shift in professional development. Professional qualifications like the Diploma in Financial Advice (DipFA) can fit around work and life commitments yet still ensure that learners attain the right level of specialist expertise. Remote learning offered by providers like LIBF further reduces barriers.
Technology’s role in this transformation cannot be understated. Digital transformation is reshaping both education and service delivery in financial advice. Skill requirements now extend beyond traditional financial knowledge to include data science and cybersecurity competencies. This evolution creates new entry points for diverse talent while maintaining the essential human element of financial advice.
AI-powered tools and digital platforms are enabling more flexible approaches to professional development, allowing practitioners to progress at their own pace. However, technology serves as an enabler rather than a replacement for human advisers, enhancing service delivery while maintaining personal connection with clients.
The future of financial advice
The future of financial advice hinges on revolutionary approaches to professional development and education. Innovation in professional qualifications, like those offered by LIBF, is already transforming how future advisers learn. Flexible qualification pathways are changing the game, allowing individuals to progress at their own pace while balancing commitments inside and outside work. This learner-centric approach enables professionals and aspiring advisors to develop in their own time, and at their own pace.
Looking ahead, the emphasis on professional development continues to evolve. More advisers are pursuing Chartered status to enhance industry standards, while the focus remains on creating flexible, accessible pathways that accommodate diverse learning styles and circumstances. This dual approach – maintaining high professional standards while increasing accessibility – is key to building a more inclusive and dynamic financial advice sector for the future.