LP&I firms urgently need to attract the next generation of smart, young talent.
Ready for a sobering statistic? Just 12 percent of university students think the life, pensions and investments (LP&I) industry welcomes young people. Written off as uninspiring, with an ageing workforce that lacks imagination, this is much more than a PR problem for LP&I companies. Without an inflow of smart, young talent, the industry itself could be heading for retirement. In this new three-part blog series, I’ll be looking at why the industry urgently needs new talent to stay relevant, what needs to change before young people start to see LP&I companies in a new light, and how to address the looming talent shortage.
Right now, these negative perceptions are largely due to the traditional face of long-term savings: the financial advisors whom customers interact with when they buy products. Their average age is 50, and approximately 80% are older than 40. This is a real challenge for the industry. There are also pressing talent issues brewing across the wider LP&I workforce, with 40% of firms already reporting talent shortages in several technology and business functions. The potential for a severe and widespread talent shortfall is all too real, and that’s a significant risk for the industry. Without a replenished and re-energised workforce, firms will be ill-equipped to meet the requirements of the ‘customers of the future’, who demand personalised, digital services to match their lifestyles.
Granted, an element of tailored financial advice will always be needed, especially for high net worth individuals and specialist advisory services. But their significance (along with their headcount) is diminishing. Customers crave digitalisation in their day-to-day lives for the ease and convenience it provides. The same preference is currently seen in the management of their wider financial needs. Increasingly in favour is a less human, more self-driven approach to transactions that enables them to be completed with speed and flexibility. The need for instant information, instant decisions and instant delivery is ever increasing the demands on the LP&I workforce and its technology.
Bottom line? Fresh talent underpinned by new technology will be vital. LP&I firms need a workforce of innovators, not a workforce of imminent retirees. The clock is ticking. It is estimated that in just two years, more than a third of the capabilities regarded as essential to the LP&I workforce will be skills that are not considered crucial in today’s marketplace.
Very obviously, something must change to pull the industry back from the encroaching retirement cliff edge. But the pivot is much easier spoken about than done, as LP&I firms are complex places with a lot of moving parts to consider. For example, a large proportion of the workforce does not perform insurance roles at all, but is employed in more generic professions like marketing, sales, legal and accounting. Roles such as these are instrumental to the success of the industry, and their importance is increasing all the time (the marketing and product designers will play a vital role in shaping revised offerings for a shifting marketplace). But would today’s ambitious young brand executive really make an LP&I firm his or her first choice? And what about building and maintaining the applications that large parts of the LP&I IT estate depend upon? It’s obvious that legacy IT skills aren’t widely taught anymore. This means the maintenance cost is rapidly increasing and investment in new IT and digital capabilities will soon be non-negotiable.
This is why the challenge of backfilling an ageing workforce is far more complicated than it seems at first. Companies need to reimagine the work, the workforce and the enablers to drive productivity, new capabilities and agility. Any solution must go much, much further than simply ensuring the recruitment conveyor belt keeps on running.
Something profound must clearly happen before graduates choose an LP&I firm over the Amazons, Googles and Facebooks of this world. The industry needs to think about what makes a job attractive to this new wave of talent – innovation, flexibility, social responsibility, culture, rapid learning curves and so on – and then develop forward-thinking strategies to provide all this and more.
In my next blog, I’ll dive deeper into the drivers for this workforce overhaul. Meanwhile I’d love to hear your thoughts, so please email me or leave a comment below. Thanks for reading.