Navigating the talent dilemma

The crux of the issue lies in the human element of our industry.

Technology hasn't quite yet reached a point where it can shoulder the bulk of advisory tasks, so large chunks of the advice process remain largely manual and human-dependent.

And, as growing firms find themselves needing to serve more clients, the need for skilled advisers becomes more critical. The stark reality is it's no secret that the number of advisers since the post-royal commission purge has plummeted by about 50 per cent between 2019 and 2023.

While some suggest this has been a necessary pruning of less capable and less ethical performers, the exodus has also included many seasoned professionals disillusioned by regulatory changes and the dual burnout exacerbated by the pandemic and elevated re-education requirements.

This talent drain is compounded by the worrying trend of fewer and fewer individuals pursuing the qualifications necessary to enter the advisory field.

We may need 5,000 new advisers in the next two years, but the pipeline is alarmingly dry.

That's just at the feeder end of the cycle. There's strong evidence that those entering the field, whilst technically strong, are unprepared for the realisation of elements of the role around client engagement, lead generation, and the myriad tasks that differentiate a well-educated adviser from someone capable of managing a book of clients.

It's also important to acknowledge the role cultural fit can play.

I've witnessed enough cases of the same adviser struggle in one environment only to thrive in another to know that some methods of advising suit some better than others. It doesn't help that if you were to put 20 practices in a room, most often you'd discover 19 different ways of operating, and not always in ways that provide any real benefit.

However, it's more than that. Lately, there's a concerning churn among younger advisers that suggests a deeper disconnect.

One theory sees many fresh graduates entering the field with high aspirations, only to find the path to success more challenging than anticipated. The allure of an instant higher salary hike elsewhere can be tempting, especially when faced with an alternative pathway with targets that may seem unobtainable.

There's a flip side to this, too.

The reality of mentoring and training new advisers is it is an investment of time. For practice owners already under time pressure, it can be a luxury they cannot afford, especially if the return on investment may be 18-24 months down the track, and stats suggesting a PY adviser may well move on before they see their third year out.

Yet, without nurturing the next generation of advisers, growth businesses face inevitable constraints.

While technology offers a glimmer of hope, our industry remains fundamentally human-driven, and the gap between the advisers needed and advisers available is getting wider.

It's not a problem that will be solved quickly whilst the barriers to entry remain so high. The general advice model is one potential solution to the insurance problem. Digital platforms like Scientiam are another.

However, unless we can find better ways to attract, train, and retain talent, and more truly innovative ways that move advisers towards being able to service more clients, we will continue to have a ceiling upon growth that may prove to be the most insurmountable hurdle.

Stewart Bell, business coach and founder, Audere Coaching & Consulting.