Why we need to invest in new talent for the future of the Commercial Finance Industry?

 In Liberty Leasing News

It was recently highlighted by NACFB Chief Executive, Adam Tyler that:

“…the average age of our commercial finance brokers is increasing and we need to invest in new talent for the future.”

This is echoed across the commercial finance sector, in fact, according to the NACFB the average age of their brokers currently stands at 45. It’s common knowledge that generally finance brokers learn their trade in the banking industry or at a funder. Therefore, you could say the funders of today are developing the brokers of tomorrow. But what are we doing to attract ‘young blood’?

Growth in Brokerages and the ‘Superbroker’

As Liberty receive much of their business from Brokers, we were pleased to see an influx of new brokers to the market following the last recession, surely linked to what was happening across the banking and finance industry. Understandably it was a logical step for some to become Brokers, utilising their wealth of experience and contacts. The NACFB stated that between 2010 and 2014 broker numbers had increased by over 40% to pre-crunch levels, with now over 1600 members.

The growth in brokerages was not only in ‘one-man band’ brokerages but also gave rise to what we now refer to as a ‘Superbroker’, a good example being Asset Finance Solutions, who are the professional platform or ‘umbrella’ for over 50 brokers. Nick Simpson, Managing Director comments:

“We have seen our franchise network continue to grow in recent years as more and more experienced asset finance sales professionals are attracted by our network proposition. We provide them with the optimum working environment”

Discussing new talent and the future of our industry, Nick was delighted when his Sales Co-ordinator, Debra Grimshaw won the “Next Generation Award” at the Leasing World Awards in 2015, Debra has been with AFS since she was just 21. Their impressive growth has also lead them to recruit 2 more sales support staff at their Blackburn head office – both under the age of 22 and both “bright and enthusiastic” in his words.

For young people, starting off in a supporting role within a Funder or for a Broker could be the best way to start a career in finance. The barriers to entry from a regulatory point of view would make it difficult for a young person to get started as a Finance Broker. However, on top of this – being a successful Broker often comes down to who you know and the reputation you have in the industry, so even for experienced finance professionals – joining forces with others makes good sense, especially for the access to different funders.

A Golden Opportunity

In the last 18 months there has been impressive growth across the commercial finance industry – fuelled no doubt by a more buoyant economy and evidenced by the emergence of new funders. The NACFB highlighted that their numbers of Patrons (usually made up of funders), went from 85 in pre-crunch 2007, down to just 45 by 2010. However, by 2016 this has now reached a record number of 137 – representing a growth of over 300% in the number of Patrons / Funders.

Following the 2008 Crash many financial institutions did not recruit or invest in ‘young blood’ which has contributed to the tendency to ‘poach’ skilled staff from the competition to support their growth, but how much longer can this continue?

Overcoming perceptions in developing new talent

There are a number of other factors within the industry that have contributed to the youth talent gap we now find. Rightly or wrongly some of the perceived challenges have been:

  • How to find the right people
  • Cost & Time for training
  • Development in practice after training
  • Building Contacts and Reputation
  • Overcoming misconceptions about age, experience and knowledge

How can these be overcome and what worked for Liberty?

At Liberty over half of our sales department (made up of Account Managers, Regional Managers and Sales Support staff) came to liberty-leasing-team-shotLiberty Leasing with little or no experience in their present field. We believe in people with the right attitude and personality, for this reason over the last 10 years we have removed the requirement for Trainee Account Managers to be graduates. Instead, favouring candidates with a willingness to learn, confidence and the right personality for our traditional ‘old bank’ personal approach.

Across all departments at Liberty, a great emphasis is put on finding new talent. Our collections team for example, have all been trained in-house. This way we can ensure all customers are treated ‘the Liberty Way’ – fairly and consistently, working with customers through cash flow issues and other financial difficulties. This was never more appreciated than through the ‘Credit Crunch’ when some of our valued SME customers seemed to have the rug pulled from under them as funders recalled their facilities or withdrew support.

Advice for the next generation of Finance Professionals

Our advice for young people interested in a Commercial Finance career is to be realistic and be prepared to prove yourself whilst working your way up. Despite living in the Digital Age do not underestimate the importance of interpersonal and people skills, at the end of the day people buy from people. Also, do your research into the companies you are interested in working for and their competitors and what are the hot topics in the industry?

For those keen to accelerate their career or cross over into the asset finance and leasing sector there is now an Asset Finance and Leasing MA which has been developed by Falmouth University in association with The Leasing Foundation. This course has been specifically designed to help finance professionals develop their career with a clear focus on creativity, leadership and innovation; key ingredients to the future of our industry. More details about this course can be found on The Leasing Foundation’s dedicated website at www.leasingfoundation.education

For those employers that have preconceptions about the ‘youth of today’, we have found at Liberty that where there may be a lack in certain skills or experience, they make up for in energy and enthusiasm. It is true that the more you invest in people the more you get in return, both in productivity, loyalty and commitment. At present, Liberty have a Sales Department of 17 including all Area Managers, Account Managers, Trainees and Sales Support staff. The average length of service in Sales is just over 4.5 years and this increases to 6 years when not including trainees taken on in the last 12 months.

Area Manager for the South East, Lewis Banford comments:

“Even though I’m now in my 11th Year at Liberty – joining straight out of university, I hadn’t planned for a career in finance but I sought a career in business that offered a split between office based and people facing. Liberty had a Trainee Account Manager role that would eventually lead me to managing my own Brokers and Clients whom I regularly visit. It took me a couple of years to learn the business and build confidence when face-to-face with professionals from all industries and backgrounds. When you are young the challenge is to overcome people’s perceptions and prove that you understand the needs of their business. All business relationships take time and trust is earned.”

A worthwhile investment

There are no signs of a slowdown in the Commercial Finance sector, Geraldine Kilkelly, Head of Research and Chief Economist at the Finance & Leasing Association, recently said:

“2015 was another strong year for the asset finance industry, with new business reaching its highest level since the onset of the financial crisis. Our latest industry confidence survey suggests growth in new business of up to 10% in 2016.”

This expected growth, coupled with the growth in ‘alternative finance’ demonstrates the need for us to invest in the next generation of finance professionals, they will support this growth and the future of our industry.

Across the finance industry we need to see more Apprenticeships and to focus on recruitment initiatives for junior roles (in addition to the traditional graduate schemes). We hope that the scheme recently launched by the NACFB in collaboration with Hitachi Capital will be the first of many, however – it is a responsibility we all share.

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