June 25, 2019

Solution to the Skill Problem in Financial Advisory Domain

Suresh Sadagopan
CEO, Ladder7 Wealth Planners Pvt. Ltd.

Solution to the Skill Problem in Financial Advisory Domain

Employment is a hot button issue today, worldwide. There is angst that there are not enough jobs being created for the millions, who are joining the workforce.

There are crushing worries that people are being replaced by machines and hence employment potential is depleting. Such an argument is partially correct as, indeed, many jobs are getting done by machines, more accurately and at a lower cost.

For instance, in automobile manufacturing, an estimated 70% of the processes are automated. This is true even in India.

Artificial intelligence, machine learning, deep learning, etc. have the potential to take over jobs which require a reasonable level of human intelligence today.  It is already happening & will accelerate in the future.

But, there is another side to this story. While we all keep lamenting about the loss of jobs & lack of jobs, there are millions of jobs which are vacant & employers are just not able to find the right people to fill in those positions!

Skill gap, not employment problem People complete courses, acquires degrees but fail miserably in interviews – even when basic knowledge is tested. This is a problem of the wrong curriculum, poor quality faculty, lack of interest on part of students to learn, focus only on passing exams rather than learning, etc. Due to all these candidates have degrees but lack skills/ knowledge that the industry is looking for.

The knowledge & skill gap that the industry faces is acute. The employers hence end up competing fiercely for available talent, which drives up the cost.

And employers make do with whatever they are able to get. They never have the optimum bench. The upshot – multiple vacancies exist in almost every organization, at various levels.

The skill gap in financial advisory services In our industry too, there is a lot left to be desired on the kind of talent we get. When we interview candidates, we find that there is a huge knowledge & skill gap in candidates.

We end up recruiting candidates who are not yet there and need to be trained from the ground up.  With such recruits, the training often has to start from scratch; it effectively means excruciatingly long training periods before the candidate becomes productive.

There is a classic problem here. Candidates want to get employed from day 1 with a proper salary, as they have ticked the box of doing a certain degree/certification. Employers find it difficult to pay a salary for someone who needs a lot of training & will be productive several months down the line.

There is a huge expectation mismatch between the employer & candidate.

Addressing the skill gapSomeone has to bridge the knowledge & skill gap before the candidates become employable.

Employers are taking up the onus of training candidates & bringing them upto speed. However, it is difficult for employers to run parallel universities. In the IT domain, the likes of Infosys & Wipro are doing precisely that, as their intake does not have the knowledge/ skills that the industry needs.

This is not a viable model as it adds to the cost tremendously & increases the gestation period before the candidate becomes productive.

There are also third parties who train candidates & make them ready for the industry. Candidates will need to spend time & money on these and hence there is a reluctance to walk this path. Employers are happy about someone stepping into the breach to train the candidates and make them industry ready. But, costs can go up as such candidates who have spent further money, would want higher salaries. But, there will be savings in time & effort. Such third parties, who can deliver industry ready candidates, are few and have low scale.

The other model is the internship model where the newbie gets a chance to work in an organization and learn the ropes.  However, the industry balks at the prospect of spending a lot of time training a rookie, who will become productive after a very long gestation period. They will need to invest a lot of time, effort & money, in this process.

The candidates are not too interested in walking down this path as, from their point of view, they have the qualifications & they need to be employed at a decent salary. This is a problem we keep facing during recruitment.

Arriving at an acceptable solution The problem looks intractable. There is no easy solution to the talent crunch. Hence, both parties will need to show flexibility.

Employers will have to be willing to have a bench with trainees, all the time. This just cannot be avoided until the time the problem gets addressed at the education provider level. They also should be willing to engage with third parties who can train candidates, who are ready to hit the ground running.

Similarly, candidates have to wake up to the huge chasm between what they know and what is expected in the industry & be more realistic. They should look at plugging the gaps in their knowledge, people skills, core work skills etc., rather than quibbling on what they should take home. Earnings should be the least of the concerns at early stages in one’s career.

Learning potential should be the consideration, as the foundation for a good career needs to be laid early in life. Those who understand this would start their career on a solid footing & be able to do very well in their chosen domain.

Huge employment potential in financial advisory services Financial advisory services area has massive potential for absorbing talent. This is a people business & would remain so, even when fintech companies mainstream in a major way.

The advisory space is an emergent area & has a lot of scope for growth.

Let us assume that the addressable population for advisory is five crore families. If all these people need advisors and one advisor can handle about 75 families, we need about 6.66 Lakhs advisors! That’s huge.

If we add the other major participant set – product distributors – to service others not served by advisors, the figure would possibly top another additional million people! There would be operations & other support staff which will be needed while providing advisory & distribution services. The requirement for such people will again be massive.

The problem is that we don’t have all these people with the required skill sets, to anchor these positions.

Conclusion The opportunities are huge. Financial advisory services alone can absorb millions of people in its fold. We need to work with enlightened self-interest.

Employers need to be willing to walk the longer, harder route of taking in greenhorns and training them to be true professionals. The aspirants should be humble enough to understand that they are not employable as they are & show flexibility to be interns for several months when they gain knowledge & learn the ropes.

The skill gap can be addressed this way until structural reforms deliver knowledgeable candidates whom employers can directly recruit or third party skill development setups step in to make candidates industry ready. Until that utopia becomes a reality, we all have to be content with Plan B!

8 Thoughts to “Solution to the Skill Problem in Financial Advisory Domain”

  1. Asoke Roy says:

    Good article.

    In my opinion, if Network FP help us to do as a third party organisation then the advisor fraternity will be benefited.

  2. renu says:

    Absolutey true Suresh. There is huge opportunity in the industry but the skill set is totally missing. The problem is that most of the academia is not even aware of the existence of this industry. Students run for one certificate after other, degree after degrees and do not realise that they are not acquiring any knowledge 🙁

    • Suresh Sadagopan says:

      There are problems all around. We all need to apply our minds to solve this. Solving this will be extremely good for all the stakeholders.

  3. Vijay Gholap says:

    New Course should be drafted in such a way that required skills to be developed in the candidate in their initial stage of course.

    • Suresh Sadagopan says:

      Very true. The course should prepare the candidate for a real-life stint due to which further extensive training is not required.

  4. Suresh Sadagopan says:

    Thanks. Yes, Network FP is doing a great job. QPFP is helpful. But, it needs to be upgraded to CFP level with a QPFP advanced level too for it to become truly useful at the advisory level. Also, Network FP will need to start churning out atleast 200 candidates a year, if not more. Going forward, the numbers need to be augmented.

  5. Khan Firdaus says:

    Good article, raises legit concerns.

    The elephant in the room is the quality of & rigour set by teaching faculty in higher edu programs in India. Do latest developments and regulatory debates find their way to classroom discussions?

    The other systemic weakness is to equate accounting to finance, with a complete disregard for key subjects such as Economics, Math-stats, Psychology and even Sociology. Another key input for success in this field is knowledge of the historical underpinning of markets.

    Much work to be done to solve the skilling pain point of the advisory industry….

  6. Nitin Sawant says:

    Excellent article,India need a lot of planners

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