Advisor loyalty at Wirehouses and IBD challenged in 2022


While overall advisor satisfaction across the employee and independent broker/trader channels hasn’t changed significantly from last year, wealth management firms continue to struggle with managing advisor attrition , according to JD Power’s 2022 U.S. Financial Advisor Satisfaction Study.

The survey of more than 3,000 advisors found that 15% of Wirehouse advisors, 10% of salaried or captive advisors, and 7% of independent b/d advisors said they are likely or definitely to leave their firm. current in the next one. at two years old. This represents an increase from the 14%, 9% and 6% in the 2021 study, respectively.

“While it’s not actually attrition – it’s just an intention to leave – it’s a pretty good red flag for someone who has a high likelihood of defecting,” said Mike Foy, senior director of wealth and loan intelligence at JD Power.

In fact, JD Power conducted an analysis of past studies to see how many advisors actually show up at another broker/dealer three years after indicating their intention to leave; the firm found that more than half (52%) of advisors who in 2018 indicated they would likely or definitely leave their firm were tracked by 2021.

But this year’s study also indicated that companies need to do more than just keep advisers happy enough not to leave, Foy said.

“It’s not just about reducing regrettable attrition, but we’re also seeing big gaps in numbers of what we call ‘brand evangelists,'” he said.

These are advisers who not only say they have no intention of leaving their firm, but also that they would actively promote or recommend the brand to their colleagues.

“[Firms] need to create brand evangelists who can help promote them, attract other experienced advisors who are potential recruits, and just be able to create a brand halo that will attract new advisors, second career advisors into the business. industry,” Foy said.

Forty-two percent of wirehouse advisors were categorized as “brand evangelists,” compared to 64% of IBD advisors and 57% of advisors across the employee channel, including wires.

Foy said compensation isn’t necessarily driving advisors out of their companies, with fewer big brands revising their compensation plans in a negative way for advisors. Technology and perceptions of leadership and culture were important factors, however.

“As technology becomes increasingly important in all aspects of how advisors run their practices, it’s important to make the right kinds of investments in technology,” he said.

“What do advisors really think about the culture they operate in and the leadership of their company? Part of the role of leaders is to really foster a really strong culture, but it’s also to communicate effectively, to have a clear strategic direction for the company. These are areas where we tend to see dissatisfied companies not performing well. »

The study also found that seniority at an employee-channel firm plays an important role in advisor satisfaction, while it’s not much of a factor at independent firms. For example, in the employee channel, satisfaction was 806 (on a 1000-point scale) for early career advisors, and this drops to 780 for mid-career and 718 for early career advisors. at the end of their career or those aged 20 or over. live. In the independent channel, satisfaction was 786 for Early Career Advisors, 775 for Mid-Career Advisors, and 781 for Late-Career Advisors.

“This is a huge risk because experienced advisors have obviously accumulated significant assets that very often will leave the company if the advisor leaves,” JD Power said,

Early in an advisor’s career, there are many benefits of being associated with a strong consumer brand, Foy said.

“They are accredited from the point of view of a potential customer of the brand; they receive training; they receive professional development support,” he said. “Over time, as they develop relationships, as they build volume of business, they get to a point where it’s more and more their personal brand and their personal relationships that are driving the references and stimulate the growth of their practice. And the relative value they get from the broker/dealer type decreases over time. And we see this relationship happening much more strongly on the employee side than on the freelance side.

Overall, Edward Jones ranked first in advisor satisfaction on the employee side, with a wound of 876. It was followed by Stifel at 872 points and Raymond James & Associates at 863. On the independent side, Commonwealth Financial Network took the top spot, at 918, followed by Raymond James Financial Services (842) and Ameriprise (821).


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