The shortage of technical skills in financial services is at its highest for five years according to the latest Skills Report from the Chartered Insurance Institute (CII) *1.
This comes as nearly a quarter of companies (23 per cent) operating in the life and pensions market are planning to cut training budgets ' an 18 per cent rise on last year.
And firms are facing the dual problem of improving technical skills while bringing the ability of both new entrants and existing staff up to scratch in basic literacy, numeracy and IT.
A generation gap appears to be emerging with some employers blaming inadequate post-education skills, an attitude of entitlement and an overly-casual approach to communication on the habits of the 'text messaging and Twitter generation' entering the industry.
Of 2,884 CII and Personal Finance Society (PFS) members polled in July, five per cent more than last year identify a skills shortage in key areas of their business.
The issue appears to be less acute in financial services than general insurance, with those working in life and pensions noting the greatest year-on-year drop (9 per cent) in the actual impact of skills shortages on business performance.
However, PFS members recorded the most pessimistic view about how the current approach to skills development could affect the UK's international competitiveness by 2020, with 21 per cent more than last year predicting problems in store for the country.
Julian James, president of the CII, says: 'Four out of five CII member companies say that their businesses are being negatively impacted because of a deficiency in technical skills. This is a long-term problem and, if we don't start to solve it, we will have fallen behind our competition in less than a decade. This is why the CII has created and is actively promoting its skills programme. We need to get young people interested in what we do, and then provide them with the training they need to ensure the long-term competitiveness of our industry.'
In terms of the wider UK education system, PFS members (56 per cent) are the most negative about how well it addresses the needs of the financial services sector. This view appears to be based on their experience of school leavers' and graduates' abilities in the workplace and the level of remedial skills investment needed for both.
Despite 10 per cent fewer members over the past five years feeling education does a poor job preparing people for entering the financial services sector, only 51 per cent believe school leavers' basic skills are adequate, while 75 per cent are critical of their ability to write basic letters.
Members' comments, captured by the research, point to the allegedly negative influence of 'text speak and Twitter' on those coming directly from education. Equally, the research reflects a perception among members that young people entering the industry today have a 'world owes them a living' attitude.
For the first time, the Skills Report asked companies whether they had provided remedial training for employees in the past year. To improve literacy, 40 per cent of firms have trained school leavers, with a quarter providing the same for graduates and 41 per cent for existing staff. Numeracy learning was conducted by 33 per cent of firms for school leavers, 18 per cent for graduates and 30 per cent for current employees. In each case, the proportion of financial sector firms investing in this form of training was higher than that across industry as a whole, as shown in the Confederation of British Industry (CBI) annual skills survey *2.
The findings suggest that addressing the technical skills gaps particular to financial services will remain a challenge while firms are forced to continue investing in employees' basic skills that haven't been instilled sufficiently by the education system.
Financial planning firm engagement with education ' in terms of placements or internships ' is relatively lower than companies operating in general insurance (32 per cent versus 53 per cent of insurance brokers), though the typical size and personnel resources of such firms may preclude offering similar levels of work experience.
*1) The Skills Report is compiled from the annual CII membership skills survey, conducted online in July 2011 with 2,884 members of the CII and PFS. Of those, 888 were members of the PFS and 142 CII members working in the life and pensions market.
*2) Pg 29 CBI Education and Skills Survey 2011(May 2011) http://www.cbi.org.uk/pdf/20110509-building-for-growth.pdf (Accessed 1 Sept 2011)
The CII Skills Report is available to access online at http://www.knowledge.cii.co.uk/resource/cii-skills-report-2011
David Ross, Director of Communications
Office: 020 7417 4478
Mobile: 07545 401788
Notes to Editors:
The CII is the world's leading professional organisation for insurance and financial services. Its 101,000 members are committed to maintaining the highest standards of technical competence and ethical conduct.
A robust framework of learning and development solutions enables the CII to support corporate partners and individuals across the industry. It ensures that all members comply with minimum standards and inspires many more to achieve advanced levels of technical and professional competence.
The Personal Finance Society
The Personal Finance Society is the leading professional organisation for financial advisers and those in related roles. With over 29,000 members, it promotes the highest standards of professionalism by setting the standards for technical knowledge, customer service and ethical practice across the entire financial advice community. To achieve its aims, the Society provides its members with access to relevant qualifications, learning materials, support services and practical benefits.
The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi, the CBI communicates the British business voice around the world.