Thursday, December 1 2022

Wealth management firms were struggling to manage attrition among their financial advisors and attract new talent long before the Great Resignation, and a combination of technological and pandemic disruptions helped compound the challenge, according to JD Power.

The company’s “2022 US Financial Advisor Satisfaction Study” indicates that the risk of advisor attrition has increased this year across all categories, with 15% of cable company advisors and 7% of independent advisors now classified as “at risk” of leaving their company in the next few years. two years.

The study is based on responses from 3,039 employees and independent financial advisers and was conducted from January to May this year.

While overall satisfaction among independent advisors is relatively consistent across all advisor tenure levels, it declines significantly among employed advisors based on their industry tenure, according to the study. Overall satisfaction is 741 (on a 1,000-point scale) among personnel advisers in their first 10 years in service, but drops to 689 among personnel advisers in mid-career and 658 among those who are 20 or more years old.

This represents a huge risk, notes the study, because experienced advisers accumulate significant assets that will very often leave the company if the adviser leaves.

“Advisors benefit tremendously from their relationship with their brokerage firm when they start their career, especially if the firm has a recognized and trusted consumer brand. In addition to the brand, the training and support they receive is crucial to them as they build their business portfolio,” says Mike Foy, senior director of wealth and loan intelligence at JD Power. . “However, once they have a critical mass of customers and a professional network, they can usually sustain growth through referrals that are more a function of their personal brand and relationships. Many advisors feel that the balance between what they give and what they get for their business has changed significantly. »

The study found that a majority (62%) of advisors said their preferred work style was either in the office most of the time (38%) or in the office full-time (24%). Overall satisfaction scores are highest among advisors who currently work in the office full-time (791), followed by those who work in the office most of the time (778).

“With the average age of a financial advisor climbing to 57 this year, wealth management companies looking to continue growing must do more than just manage advisor attrition rates; they must also actively create brand evangelist advisors who will attract the next generation of talent,” Foy said in a press release. “Companies that make the right investments in technology, effective marketing support, competitive products and services, and have a strong top-down corporate culture significantly outperform the competition in advisor satisfaction and advocacy.”

Among advisors ranked as brand evangelists — those with the highest levels of satisfaction and loyalty to their company — 91% said the technology offered by their company had improved over the past two years, according to the study. Additionally, 79% said their company offers competitive products and services and 74% said their company’s leadership fosters a strong culture.

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