U.S. wealth management firms have an “advisor engagement problem.” With volatile markets, growing compliance and administrative responsibilities, and an aging advisor population, many advisors are planning their exit strategies.
Nearly one-third of financial advisors say they do not have enough time to spend with clients and 20% say they are five years or less away from retirement, according to the J.D. Power 2023 U.S. Financial Advisor Satisfaction Study released Wednesday.
“In difficult market conditions like the ones we’ve been experiencing for the past several years, great investment advisors set themselves apart by proactively addressing their clients’ needs, delivering comprehensive guidance and communicating clearly and frequently about the issues that matter most to their clients,” Craig Martin, executive managing director and head of wealth and lending intelligence at J.D. Power, said in a statement. “Right now, many advisors are struggling to find the time to deliver the level of hands-on service they know is critical to growing their business.”
Martin added they’re spending more time on administrative and compliance-oriented tasks, and, in many cases, they are starting to question whether their “firm is committed to providing them with the support and resources they need to succeed.”
Among the findings:
- Administrative agony: Nearly one-third of advisors say they do not have enough time to spend with clients. Advisors falling into this category spend an average of 41% more time each month than their peers on non-value-added tasks, such as compliance and administrative duties.
- Ongoing apathy: With the average age of U.S. financial advisors being 56 years old, 20% of advisors indicate that they are five years or less away from retirement. In addition, 30% of employee advisors and 28% of independent advisors say they “probably will” be working for their current firm in the next one to two years as opposed to saying they “definitely will.” It suggests that even if advisors are not contemplating leaving the industry or their firm, many may become apathetic about their situation.
- Female satisfaction: Among employee advisors, overall satisfaction is significantly higher among female advisors than among their male counterparts. Among independent advisors there is not a material difference in overall satisfaction and NPS scores between genders.
- Support matters: Among employee advisors who are most likely to stay with their firm for the long term, the top reasons given for staying are a strong culture and company leadership. Other key factors influencing advisor retention and advocacy include professional development support and training and technology.
So which firms are doing it right?
Among employee advisors, Stifel ranks highest in overall satisfaction with a score of 777. Raymond James & Associates (711) ranks second and Edward Jones (672) ranks third.
Among independent advisors, Commonwealth ranks highest in overall satisfaction with a score of 798. Raymond James Financial Services (697) ranks second, while Ameriprise (664) and Cambridge (664) rank third in a tie.
