The shortage of advisers compared with the increasing advice gap is a well known issue but apprenticeships could be a solution to both, according to some in the industry.
In light of National Apprenticeship Week (February 6-12), the Personal Finance Society spoke to industry professionals about apprenticeships in the insurance and financial planning professions and how they can benefit both firms and their employees.
Speaking on the podcast, Tom Hegarty, chair of the financial planning trailblazer group and director at M&G Wealth, said the number of advisers within the sector has reduced gradually over the past few decades from about 200,000 in the 1980s to 30,000 today.
“There's a number of reasons for this, mainly to do with regulation and increasing costs to be an adviser, but it has caused issues around the accessibility and affordability of financial advice to consumers,” he said.
“In order to fill that advice gap, we need to recruit more financial advisers to increase the supply of advice and we also need to see the emergence of new advice models which could offer alternative solutions to clients which are likely to be seen through the development of technology.”
Another solution to grow the number of advisers could be apprenticeships, he explained.
Many large financial advice businesses tend to run their own academies and train and develop new talent for the future themselves.
However, he said: “In addition to those academies and new advisers, we need to give or have the option available for smaller businesses also to recruit, train, and develop their own talent as well - for those who don't have access to academies or large companies or could be costly for them to use.
“This is where apprenticeships could be a great mechanism to help.”
Hegarty explained that the policy around apprenticeships has been updated in the past few years and there have been apprenticeship programmes available for financial advice, paraplanning, and a range of other areas in the sector as well.
A small financial advice business could recruit a trainee and put them on to an apprenticeship programme in financial advice or paraplanning.
“The majority of those costs are paid for by the government with a small contribution coming from that advice business,” he said.
“That apprentice would need to be employed by that business, they’d need to be paid a wage, and then around 80 per cent of their time will be spent working within that business but around 20 per cent of their time will be spent on learning and development on the apprenticeship programme.
“That's why it's a great way for advice businesses to be able to recruit and develop their trainee advisers through apprenticeships.”
As the chair of the financial planning trailblazer group, Hegarty said the apprenticeship programmes that exist at the moment are effectively a syllabus for financial planning and paraplanning career paths.
They are known as apprenticeship standards and they need to be updated every few years.
