The future of the financial planning profession: burnout in neighbouring professions
An article published in the Financial Times on 23rd March 2021 entitled: 'Professional services face losing junior staff to burnout' highlighted the impact of the pandemic on the retention of younger staff in large law and accountancy firms and mentioned that some larger banks and other financial institutions were indicating something similar.
It got me thinking about the possible implications for the financial planning profession in the medium and longer-term.
There has certainly been an uptick in M&A and private equity activity globally with over 8,000 private equity deals in 2020, nearly the highest since records began. Couple that with bankruptcy filings in the US up 16.5% to and it is perhaps understandable that more trainee and junior lawyers are spending more time working on urgent matters. The article highlighted several concerns:
- The pace of work was no longer balanced by social interaction and the ability to take holidays had been curtailed in some incidences.
- Senior lawyers are already seeing departures amongst more junior lawyers.
- Investment analysts at Goldman Sachs reported working an average of 95 hours per week and suffering from anxiety and depression.
- PwC UK chair Kevin Ellis also said that he was worried particularly about the 3,000 new recruits who were hired in 2020, due to the lack of ability to make friends and gain support in the office environment.
This is not just a US problem; it is being felt across the globe. The article is well worth a read.
But what does this have to do with the future of the financial planning profession?
Well, here’s the thing; those lawyers who are resigning would have been the lawyers that your successors would turn to in the future. They could also have been future clients of your financial planning business along with being a great source of referrals and professional connections. They could be helping with your M&A activity when you come to change shareholders, acquire other businesses, sell your own or merge with another one.
This could now cause a future shortage of lawyers and push up the price of their services. This in turn would have to be absorbed by your business or passed on indirectly to your clients in higher fees charged.
Have you identified your ideal potential clients? Are they professionals from the legal and accountancy professions only? If so, it might be worth broadening out your offering. You could aim your business services at senior professionals in institutions or go down a different track and consider tailoring your services to a new niche such as entrepreneurs.
How might the departure of junior staff from investment houses such as Goldman Sachs affect the financial planning profession in the long run? I’m still pondering that one. I suspect if demand rises then all these firms will have to pay more to attract and retain professionals. Something will have to give and a balance needs to be found for more junior staff in particular.
It will be interesting to see where those leaving law, accountancy and other financial services end up. Might they do something completely different and retrain? Or could we, as a profession, attract them into financial planning? With financial planning and cashflow services being dominated in the UK by a large number of smaller businesses, could we attract them to join us and become our next generation of great financial planners?
What plans do you have to orchestrate your own exit from your business? Are you in touch with other financial planning firms now? Are you aligning your business processes in plenty of time to ensure a smooth sale of your business should the time come to do that?
Even if you don’t plan to sell, embedding the processes that would be necessary to achieve the best price will make your firm more robust and increase your own options. Many financial planning businesses want to create a sustainable business legacy – so how will you do that? How will you attract the next generation of financial planners? Do you have a graduate or other recruit scheme? Even having a mini one can help with direction for training and support of your team and their future capabilities.
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