You probably already know that the financial advice industry is undergoing a period of change. It has been slowly contracting over the last few years, with many advisers leaving the sector and not enough young talent or trainee financial advisers entering the industry to replace them. In fact, research has shown the most UK advisers are over the age of 56, whilst just 6% are aged 35 or under – and because older advisers are exiting the industry without passing their knowledge on to successors, there’s also an information gap that needs filling as well.
This means an emphasis on learning and mentorship is needed. What’s the appeal for a trainee financial adviser? Well, research has shown that employees who receive mentoring and support from their workplace tend to stay at companies longer and land senior positions – and mentorship programmes are a great way to attract fresh talent to the financial advice industry, too. So, is mentoring the future of financial advice? It certainly seems to be!
What is a mentor?
Mentoring is described by the CIPD as ‘a relationship where a more experienced colleague shares their greater knowledge to support the development of a less experienced member of staff’. It’s a reciprocal and collaborative learning relationship between two individuals, with the mentor providing the mentee with encouragement, support, advice and guidance, whilst also helping them to grow their support network by introducing them to other inspiring and influential people in the industry.
Of course, there is plenty of professional support available to new and aspiring advisers through the likes of training courses, conferences and events – but mentoring provides a unique opportunity for a trainee financial adviser to speak to learn from someone with real-life experience, making it incredibly beneficial to new advisers entering the industry.
Why mentoring is so appealing to young people
Mentoring provides an excellent opportunity to engage young talent with a passion for the industry, sharing with them invaluable knowledge which has been built up as a result of decades of experience. For young advisers, having someone in their corner who is prepared to give the necessary guidance to get them to where they want to be can have a huge impact on their career.
In fact, research has shown that engaging in the supervised practice of financial planning by experts is the most effective way of gaining professional experience – and a clear development path is really important to young people today. 65% of millennials would opt for a job with a lower salary if the work was interesting and it aligned with their career goals, whilst another 65% said personal development was the most influential factor in their job. It’s no surprise then that 78% of millennials are attracted to companies where although the salary is lower, the path for growth is clear.
Young advisers want to visualise their development journey and how they can progress – and due to the average age of advisers in the market at the moment, there is a huge opportunity for young advisers today. If they can strategically position themselves into a place where they can take on the clients of a retiring mentor, for example, they are in for a very successful career.
Why mentoring is appealing to women
It’s not just young advisers that mentorship programmes are appealing for, though. It’s no secret that there aren’t enough women in the advice industry – and mentorship programmes could be just the thing to change that. If firms are to bridge the trainee financial adviser gap and encourage more young advisers to join the industry – including women – there need to be more female leaders to attract young, motivated women to the industry. With more women at the helm, a greater proportion will be encouraged to join the sector and even numbers out, helping to fill the adviser gap.
There is evidence that one of the reasons men are promoted faster than women and that you find more men than women in senior leadership positions is that men are better at finding effective mentors. Data from the Financial Times shows that whilst just over half of a companies’ finance employees are female, 58% are at a junior level, with women making up just 14% of executive-level employees. Currently, 40% of the global workforce is female and a further one billion women are anticipated to enter the workforce over the next decade. Despite this, 25% of female millennials do not feel there are senior female role models that resonate with them at their current employer.
But mentorship programmes could be the key to encouraging women to climb the corporate ladder. Being able to tap into a network of expertise and support is invaluable, particularly in cultures and industries that tend to be male-dominated – and involving male leaders in female mentoring could well lead to greater understanding and representation of women, too.
Why mentoring is appealing to mentors
It’s not just mentees who benefit from mentorship programmes. By acting as mentors, experienced advisers create opportunities in their firms that benefit both their business and their clients in the long term. The fact is that mentoring is a great way to develop and grow business. From attracting top talent to increasing employee retention and developing leadership skills, mentoring programmes provide a number of benefits for companies.
Let’s face it, when it comes to training new staff, firms have two choices: advisers can either learn by trial and error, or they can follow a predetermined path to success. The learning curve to becoming an adviser is steep and the skills needed to succeed in this industry are vast and ever-changing. Not only are technical and analytical skills important, but relationship skills and the ability to connect with clients is essential to a firm’s success, too.
What’s more, mentorship programmes also help to pave the way for seamless, no-surprise succession planning. Not only is this a bonus for senior advisers who want to pass their life’s work onto someone they trust, but bringing on the next generation of advisers in this way is also good for clients who seek continuity in their financial planning needs.
How to run a successful mentorship programme
If you are thinking about running a mentorship programme at your financial advice firm, here are some key things to bear in mind:
- Focus on relationships – successful mentoring requires a trusting, confidential relationship based on mutual respect
- Set boundaries – mentoring involves a close relationship with clear boundaries and ground rules in order to work
- Be aware of the time commitment – mentoring can take time and can last for years, so don’t commit to a time commitment you can’t honour
- Set challenges and goals – a mentorship is designed to enhance growth, so identify goals and devise a strategy to reach them
- Encourage regular feedback – for both the mentor and the mentee to ensure the programme is working for everyone
Ready to future-proof your firm?
From attracting the advisers of the future to clear succession planning and paving the way for more female leaders in the industry, mentoring is essential to the financial advice industry – and experienced advisers might even find they learn a few tricks along the way, too! If you want to find out more about how to recruit the advisers of the future so you can future-proof your firm, contact Recruit UK today.
