“Blue Monday” is bleak for overstretched households, but spare a thought for debt advisers too

The so-called “most depressing day of the year” is a tough moment for under-pressure households. But it’s little better for the people we rely on to pick up the pieces when the money runs out.

The third Monday of January has earned its grim reputation: Christmas spending still on the card, direct debits landing, energy bills biting. For households already running a budget deficit, the year begins with a sinking feeling there’s no way to make the sums add up.

Happily, there is help at hand for overstretched consumers. This week, thousands of us will call a money advice provider to share our money problems and start the process of getting on top of them. Having worked in face-to-face debt advice for two decades before becoming an MP, I can tell you what a difference it makes to peoples’ lives.

Now, imagine being the person on the other end of the phone whose job it is to help. For debt advisers in the free-to-client sector, Blue Monday is no less stressful. Which is why the Institute of Money Advisers, of which I am Patron, chose this week to publish its latest ‘Workload Conditions and Wellbeing Survey’.

The headlines aren’t great: a widening shortfall in adviser pay, increasing workloads and worsening capacity constraints as a result. This is bad news for advisers, obviously, but also for the Government which is trying to expand debt advice to deliver on its financial inclusion goals.

The numbers on pay are starkest. Adviser pay lags the UK median full-time-equivalent salary for similar work by 26%. The typical paid money adviser earns £28,946 compared to a UK median full-time salary of £39,039, as calculated by the Office of National Statistics. Closing the £10,100 gap would require a 35% uplift in adviser pay.

Set this shortfall against the uptick in advice ministers want to see as part of their Financial Inclusion Strategy and you can see the problem they face too. The Treasury has earmarked a significant increase in capacity and pledged an extra £100 million to pay for it.

Good news, but ministers will miss their target unless the money is used to improve adviser pay. “The extra advice simply won’t materialise under current pay conditions”, says IMA Chief Executive, Robert Wilson. “We face a serious shortfall in advice capacity at a time when demand for advice is rising”.

And the problem isn’t just pay. With cost-of-living pressures biting, the complexity of casework is also increasing. 88% of advisers are encountering ‘deficit budgets’ once a week or more, where the money going out exceeds the money coming in. 89% are encountering mental health problems at the same frequency.

Unsurprisingly, client numbers are rising. One in five of advisers (21%) are expected to take on 10 or more new clients a week – double the percentage two years ago. This is far beyond what advisers say is sustainable.

Debt advice is not a conveyor belt. Clients arrive with markedly different combinations of problems: income shocks, multiple debts, housing crises, family breakdown, even domestic abuse. Rarely is there a quick fix, and yet advisers are expected to juggle dozens of clients and deliver effective, empathetic and sustainable solutions.

This takes time. A typical first appointment takes an average of 81 minutes, plus a further 110 minutes to write up case notes. A new client can take half a working day.

The Government recognises the value of the service — it’s why its Financial Inclusion Strategy hinges on expanding it. So why are we paying the workforce as if it’s low-skilled, low-stakes work?

The knock-on effect of poor pay is exactly what you’d expect in a labour market where skilled workers have options. Over half of advisers (54%) have considered leaving their job. Half know colleagues who have left the profession due to excessive workloads.

Workload requirements are hampering recruitment efforts and service delivery is suffering. 71% of advisers say it is no longer possible to support clients at risk of vulnerability.

In short, our reliance on debt advice is increasing, yet pay and conditions are making it harder to retain experience and recruit new advisers.

Ministers know there is a problem; and to its credit they are working with the Money and Pensions Service to increase supply. But they also need to confront a blunt truth: if they want more debt advice capacity, debt advisers need parity on pay.

A funding uplift that doesn’t translate into fair remuneration and manageable caseloads will not deliver the extra capacity ministers are targeting. If the Treasury ever needed an illustration of the wisdom of “investing now to save later”, this is it.