Generally speaking, any industry or profession needs new blood to replace people either retiring or leaving the industry. Yet concern has been expressed by some that it is difficult for new entrants to financial advice to become established.

Many training providers exist to get new entrants to the industry through their Diploma examinations, which have been required in order to give investment advice since the implementation of the Retail Distribution Review (RDR) in January 2013. Yet once they are qualified, what do they do then?

A great many financial advisers in the UK are self-employed, and operate either on their own or with a single business partner. Yet the requirements for a new industry entrant considering setting up on their own are rather onerous. Consider the need to meet regulatory rules on capital adequacy; pay the authorisation fees to the Financial Conduct Authority (FCA) and the levies to fund the Financial Ombudsman Service, the Financial Services Compensation Scheme and the Money Advice Service; and to meet the costs of ensuring compliance with regulatory obligations.

Owing to these factors, it might be anticipated that newly-qualified advisers would join existing firms. However, the problem here is that many firms only wish to take on advisers with established client banks, and of course a new adviser would not be expected to have such a client bank.

The number of traditional practice-based financial advisers has remained fairly static since the introduction of RDR. The fall in adviser numbers is largely due to bank advisers losing their jobs as the big high-street names either scale down their financial advice operations, or abolish them altogether. Many within the industry have commented on the ‘advice gap’ that may be created as a result, where some customers, especially those considered to be ‘mass market’, find it increasingly difficult to access financial advice. Even FCA chief executive Martin Wheatley has indicated that he is concerned by this.

But if it really is so difficult for new entrants to the industry, this could create a bigger problem with access to financial services than the withdrawal of bank advice.

Derek Bradley, chief executive of online forum Panacea Adviser, has commented that one anonymous new adviser has expressed his concerns by saying to him: “I want to progress as an adviser but firms only want ready-made advisers with an existing client bank. It’s a short-sighted approach and it ultimately means there are fewer advisers coming through, with many clients priced out of advice. Even if I were to set up my own firm, the costs would be prohibitive so it’s a catch-22 situation.”

21 year old Ben Philpott, who has joined his father’s firm in Huddersfield, commented: “I am very lucky compared to other young advisers who struggle to find client banks and I am unconvinced that networks would want to take them on because they’ve got nothing to work with.”