Even before the Great Resignation, wealth management firms were struggling to manage attrition among their financial advisors and attract new talent to the profession.
According to the J.D. Power’s 2022 U.S. Financial Advisor Satisfaction Study, a combination of technological- and pandemic-driven disruptions has exacerbated that challenge. Wirehouse firms have the largest proportion of at-risk advisors, with 15% considering leaving their firm in the next one to two years. Among independent advisors, 7% fall into that “at-risk” category of leaving their firms in the next two years.
“With the average age of a financial advisor climbing to 57 this year, wealth management firms that want to continue to grow must do more than just manage advisor attrition rates; they also need to actively create advisor brand evangelists who will attract the next generation of talent,” said Mike Foy, senior director of wealth and lending intelligence at J.D. Power.
Foy adds that many firms are missing the mark on developing that level of advisor engagement, but there are some clear drivers that need to be in place for that to happen. “Notably, firms that are making the right investments in technology, effective marketing support, competitive products and services and have a strong top-down corporate culture are significantly outperforming the competition when it comes to advisor satisfaction and advocacy,” he explains.
Tech, Products and Culture
Among advisors classified as brand evangelists—those with the highest levels of satisfaction and loyalty to their firms—91% say the technology offered by their firm has improved during the past two years. Similarly, 79% say their firm offers competitive products and services, and 74% say their firm’s corporate leadership fosters a strong culture.
Tenure Levels
While overall satisfaction among independent advisors is relatively consistent across all advisor tenure levels, it declines significantly among employee advisors based on the length of their industry tenure, the study notes.
Overall satisfaction is 741 (on a 1,000-point scale) among employee advisors in their first 10 years of tenure and falls to 689 among mid-career employee advisors and to 658 among those with a tenure of 20 years or more. “This represents a huge risk as experienced advisors obviously have accumulated significant assets that will very often leave the firm if the advisor departs,” J.D. Power warns.
Meanwhile, most advisors want to go back to the office. The study found that 62% of advisors say their preferred work style is either in the office most of the time (38%) or in the office full-time (24%). Overall satisfaction scores are highest among advisors who are currently working in the office full time (791), followed by those who are working in the office most of the time (778).
Study Rankings
The U.S. Financial Advisor Satisfaction Study measures satisfaction among both employee advisors (those who are employed by an investment services firm) and independent advisors (those who are affiliated with a broker-dealer but operate independently) based on six key factors:
- Compensation
- Leadership and culture
- Operational support
- Products and marketing
- Professional development
- Technology
Among employee advisors, Edward Jones once again remained in the top spot, ranking highest in overall satisfaction with a score of 876, followed by Stifel (872), Raymond James & Associates (863), Ameriprise (822) and Morgan Stanley (784) rounding out the top five.
Among independent advisors, Commonwealth also retained the top spot from last year, ranking highest in overall satisfaction with a score of 918. They were followed by Raymond James Financial Services (842), Ameriprise (821), Segment Average (781) and LPL Financial (776).
The study is based on responses from 3,039 employee and independent financial advisors, and was fielded from January through May 2022.
