by Adam Owen, Director at NextGen Planners and President of the Personal Finance Society.
We hear a lot about the aging demographic of financial advisers. Articles often quote this as the mid-fifties, and when we attend a financial planning conferences we regularly see swathes of greying and balding heads.
When I recently raised the point that a survey from one of the trade publications has stated that 30% of the adviser population wants to retire in the next five years, a colleague of mine reminded me that the same survey last year, the year before, and five years quoted the same figure. Yet the number of advisers has steadily increased since RDR.
Still, if 30% of the adviser population retired in the next five years, that would amount to almost eight thousand people. If we assume that half of these would be retirees are simply responding optimistically, then the profession has five years to recruit, train and plan the succession for around four thousand people. This may be a conservative estimate and there will be some attrition but whatever the numbers are, it's clear that as a profession, we need a coordinated plan.
Independent training companies make technical and soft-skills training available to small businesses to nurture new talent. Apprenticeship schemes such as the PFS Aspire programme are also be an option, along with in-house academies from some of the larger firms. Additionally, methods of succession are being developed such as employee ownership trusts to provide options to be compared against the more traditional sale methods.
All of this is positive, but while we have focused our efforts on bringing new talent into the profession and helping individuals develop their financial planning skills, little has been done to develop leadership skills. If a large number of our profession's most experienced leaders and managers are going to retire in the next five years, we need to bridge not just the skills gap, but the leadership gap.
I am now in my third decade working in financial services and I, like many of my peers, am an accidental leader. I became disgruntled working within an advisery business in the late 1990s and decided to set up on my own. It was relatively easy to set up an IFA practice back then. I had no idea of the mistakes I was going to make along the way. Looking back, I can attribute this to my lack of understanding of what it takes to be a leader and manager.
What do you think about what it means to be a great leader? I imagine certain people come to mind. There is conventional wisdom in terms of who our highest profile, historical great leaders have been. However, for some time, I have wondered if leadership qualities are universal or situational and, as society has changed, has what leadership needs to be changed with it?
Everywhere we look we can see examples of how we have lost the reverence once shown towards positions of leadership and we now focus on the individual. We have reached an inflection point where we can see that in every aspect of our lives, effective leadership is something you do with people and not to them.
Leadership is now emergent rather than decreed, and for that to happen, certain conditions need to be met. For people to follow a leader, they must build a case for leadership. People need to feel that they are part of something bigger. A leader must create trust, and an important factor in trust is authenticity.
A leader must be true to themselves and work on the strengths and weaknesses that make them who they are. This is where it is important to show vulnerability. Successful leaders recognise that it is okay to admit they have made a mistake, as long as they apologise and then work hard to put it right.
It is also vital that leaders show their enthusiasm for the task that they are trying to lead people to achieve. People are soon overwhelmed by uncertainty if a leader shows a lack of enthusiasm for a particular project or goal.
All of this works only if a leader communicates with care and compassion. They must sense the mood and above all, listen.
Finally, to be a truly effective, a leader must reject status. That doesn't mean a leader can't be proud of their personal achievements, but it does mean that they must be willing to be judged by results, not appearances
Teaching a new generation of financial advisers means investing in the development of their leadership skills. This isn't simply an academic journey. It takes time to develop the mindset required to ask people to follow you and then actually do so. The clock is ticking, and as a profession we need to act together to support our next generation of leaders. How will you act?
Adam is Curriculum and Training Director at NextGen Planners. He joined the profession in the mid-1990s and has held advisory roles within direct sales and the IFA sector and provided technical compliance support to both DA firms and Networks. He was a founding director of support provider EQI Consultancy and has held a variety of senior compliance and supervision positions. More recently, he has focused on developing career pathways throughout the profession, becoming a CII and PFS accredited trainer and President of the Personal Finance Society.
