The Pipeline Paradox

As AI reshapes entry-level work in professional and financial services, an important issue everyone is grappling with: how will organisations develop the future leaders who traditionally built their expertise through these roles?

Hilary Smyth-Allen · CEO, SuperTech WM

There is a version of the AI story in professional and financial services that is broadly reassuring. AI handles the routine; humans handle the complex. Productivity rises. Firms grow. Roles evolve rather than disappear. The Industrial Revolution was disruptive too, and we found our way through it.

But there is a more uncomfortable question embedded within this story, one that has been surfacing consistently in discussions across our sector community, and one that was given considerable weight in the Financial Services Skills Commission’s recent report to HM Treasury, ‘A Workforce Transformed’ - a piece of work which included evidence contributed by the tWest Midlands professional and financial services community, facilitated facilitated by SuperTech WM. The question is this: if AI automates the work that junior professionals have historically done to build their craft, what exactly do we lose? And who bears the cost?

What the national evidence tells us

The Financial Services Skills Commission’s report, published in May 2026, provides the most detailed picture yet of how AI is reshaping tasks, roles and skills across the sector. Its findings are instructive. Up to 50% of the component tasks in most financial services roles carry significant automation potential. Entry-level and junior roles, those with the highest proportion of structured, repeatable, data-intensive tasks, are under the most acute pressure. Global job postings in financial services requiring zero to two years of experience fell by 24% in the period to early 2025. For some specific roles such as data entry, auditing, payroll, financial analysis, the declines were considerably steeper.

The Commission is careful to note that correlation is not causation, and that multiple factors. economic conditions, business strategy, and post-COVID normalisation are at play in any given firm’s recruitment decisions. That caution is appropriate. But the directional signal is consistent: firms across the sector are hiring fewer people at the beginning of their careers, and the roles that do exist for early career professionals are moving upmarket faster than the people competing for them can follow.

Entry-level positions still exist, but master’s degrees and higher-level apprenticeships are becoming an entry-level benchmark for some roles, raising the bar again for early career applicants.

What makes this more than a labour market story is what it implies for the longer-term health of the profession. The Commission’s report is explicit on this point: as AI automates the foundational tasks through which junior professionals have historically learned their craft, the “transmission of institutional knowledge weakens.” The concern is not simply that there are fewer entry-level jobs. It is that the pathway through which people develop the sector-specific judgement, the commercial awareness, the professional instincts that are ultimately what clients are paying for, is being quietly eroded before anyone has designed an adequate replacement.

Our regional context

The Commission’s findings resonate strongly with what we have been hearing through our own engagement with West Midlands professional and financial services firms, including at a senior leaders’ roundtable convened in Birmingham in June 2026 as part of our ongoing work to update the evidence base on the region’s Next Generation Services sector, in partnership with City-REDI at the University of Birmingham and the West Midlands Combined Authority.

Firms across law, accountancy, management consultancy, financial services, and recruitment described variants of the same structural tension. AI is eroding the technical work that juniors historically did. Hybrid working has reduced the incidental learning: the overhearing of difficult client calls, the observation of how a senior colleague navigates a negotiation, the accumulation of professional instinct through proximity, that used to happen without anyone planning for it. And a generation that missed formative years of social and professional development through COVID is now navigating both of those shifts simultaneously.

The result, as one participant put it, is that people are not where they need to be at the two, three, or four year mark of their careers. Not through any lack of ability or effort, but because the conditions that produced professional formation in previous generations are no longer reliably in place. Communication, commercial judgement, the ability to hold a difficult conversation with a client, the capacity to exercise independent discretion in a regulated environment are precisely the skills that firms most urgently need from their people and are precisely those that that are hardest to develop in the absence of those conditions.

The pipeline breaks not at recruitment but at formation; that is the forming of high performing professionals. And formation requires conditions that are quietly disappearing.[ST1] 

This is not a complaint about young people. It is an observation about the environment in which they are being asked to develop, and about the mismatch between what firms say they need and what the current training and working infrastructure is actually producing. Several participants at the roundtable were candid that their current boards, composed largely of people who trained in a pre-AI, pre-hybrid environment, are not ideally placed to design the solution, precisely because they did not experience the problem.

The succession question

The deeper risk, which the Commission’s report touches on and which our regional discussions made explicit, is what this means for succession. The partnership model in law and accountancy, and the senior leadership model in financial services more broadly, depends on people having worked their way through a structured progression: accumulating technical competence at the base, developing client relationships and commercial acumen in the middle, and arriving at senior positions with a comprehensive understanding of how the firm’s work actually gets done at every level.

If the base of that progression is being hollowed out — if the entry-level roles through which people learn to be professionals are being automated before adequate alternative pathways have been designed — then the question of where the next generation of partners and senior leaders will come from is not merely a human resources problem. It is a structural risk to the long-term competitiveness of the sector. And it is a risk that firms are, understandably, reluctant to quantify, because the consequences will not be visible in this year’s performance data or next year’s recruitment numbers. They will show up a decade from now, when the cohort that should have been developing through the 2020s turns out not to have done so in the ways that previous cohorts did.

And to be blunt, we ‘have this T-shirt’ already. When the sector was last meaningfully consulted in the context of informing the then Local Industrial Strategy (circa 2018), the absence of skills was a comment lament of the senior leaders.  Not at entry level, but at the 5-10 year post graduate/ post-qualified level which directly correlated to the sudden withdrawal of graduate positions linked to the financial crash in 2008 and the slow recovery thereafter.

The Commission’s report is clear that firms expect early career roles to evolve rather than disappear as they move toward analytical, commercially-aware positions that use AI-enabled tools from the outset. That is a reasonable aspiration. But aspiration and design are different things, and the roundtable discussions suggested that very few firms have yet moved from recognising the problem to systematically redesigning the pathway in response.

A regional dimension

There is a West Midlands-specific dimension to this that the national evidence illuminates but does not fully surface. The Commission’s report notes that places with a high concentration of repetitive and automatable roles will experience a deeper impact from AI adoption than those where personal service and complex professional judgement are more central to the offer. The West Midlands’ professional and financial services sector encompasses both: major national and international firms doing sophisticated, high-value work alongside some back-office and shared services presence that is more exposed to automation at volume….albeit the latter has reduced proportionally compared to a decade or so ago as the region has moved up the value chain with the quality of its services offering. 

The region’s universities also have strong widening participation profiles, meaning that a disproportionate share of the young people most affected by the contraction of entry-level roles are from lower-income backgrounds for whom the professional services sector represented a credible and relatively accessible route to social mobility. If that route is narrowing, not through any deliberate policy choice, but as an unintended consequence of automation decisions that are rational at the firm level, the consequences will land unevenly, and they will land hardest in communities and on individuals who have the fewest alternative pathways available to them.

The pipeline paradox is not just a sector challenge. In the West Midlands, it is a social mobility challenge too.

What needs to happen

The Commission’s report calls for collaboration between employers, education providers, and government to redesign entry pathways and ensure that individuals can develop the skills and experience needed for future leadership roles. That is the right framing, and the West Midlands has the institutional assets, with multiple universities, a substantial employer base, a combined authority with real convening power, and sector bodies with growing credibility, to contribute meaningfully to that redesign.

But the regional contribution needs to go beyond participation in national programmes. It requires a clear-eyed assessment of what the formation pathway for the next generation of West Midlands professional services leaders actually needs to look like — what replaces the osmotic learning that hybrid working has reduced, what structured alternative exists for the foundational technical work that AI is automating, and how firms that are competing with each other for talent can nonetheless collaborate on the shared challenge of developing it.

As if any of this was easy and revolutionary; it’s the same cry as ever. But the difference this time is both the pace and likely permanence of the change. The financial crash was ‘temporary’; covid was ‘temporary’. This is not that.  And the gap between education institutions and industry is arguably widening because of the pace, at a time when each party needs each other more.  The pipeline paradox is real.

Hilary Smyth-Allen is CEO of SuperTech WM, the West Midlands’ cluster body for financial and professional services technology and is a partner of CIty-REDI, co-producing the evidence base for the region’s Next Generation Services cluster sector. This piece draws on discussions from a Senior Leaders’ Roundtable held in Birmingham on 12 June 2026.

What does formation mean in this context? Ongoing employment?