Investec Wealth & Investment commissioned independent research agency Viewsbank to interview 535 UK consumers with stock market related investments between 30th June and 3rd July 2023

The study amongst 535 UK consumers with stock market related investments revealed that on retirement of their adviser, three in five (61%) will retain the same firm and use another professional within the company; 31% said that they will find another adviser for themselves and 8% said they will stop using a financial adviser altogether.

The concern over losing their adviser to retirement may be heightened by the fact that 21% of people believe their financial planner will retire within the next two years and 41% think this will happen within the next five years. Their fears are not unfounded and are backed up by other Investec Wealth & Investment research, which surveyed 100 financial advisers and planners about their retirement plans in January 2024, with almost half (49%) stating that they had plans to retire within the next five years. Around two in five (35%) said they planned to retire by the time they turn 50.

The research by Investec Wealth & Investment (UK), which provides products and services to help advisers build a competitive advantage and protect and grow their clients’ wealth, reveals that men are much more pessimistic about losing their financial adviser than women, with more than half (52%) of men saying they were either “very concerned” or “quite concerned” about the prospect of their adviser retiring, compared to 25% of women.

Nick Vaill, senior investment director at Investec Wealth & Investment (UK), said: “It is entirely understandable that clients often find themselves worrying about what will happen to their financial investments and affairs when their adviser retires. They are concerned about losing the personal attention and expertise they have come to rely on and are worried that any change in personnel could disrupt the continuity of their investment strategies that have been put in place.

“However, retirement is part of the natural course of life and most financial advisory organisations will have succession plans in place to ensure the smooth transition of a client’s financial assets to another qualified professional. We have seen the importance of advisers implementing a centralised investment proposition and working in conjunction with a Discretionary Fund Manager to better facilitate the sale of a business or hand over to a new adviser. Advisory models do come with additional administrate burdens and costs which may put off potential acquirers.”

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.

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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%).

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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.”