Study shows all categories of wealth are at greater risk of advisor attrition this year
Wealth management companies were striving to control attrition among their financial advisers and entice new talent to the sector long before the Great Resignation became a widespread phenomenon, but a mix of pandemic and technological disruption has compounded this problem.
That’s according to the newly released J.D. Power 2022 U.S. Financial Advisor Satisfaction Study.
Mike Foy, senior director of wealth and lending intelligence at J.D. Power, said, “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.”
Foy said there are some very clear drivers that need to be in place for it to happen, but many firms are failing to generate that degree of advisor engagement. Notably, companies who are investing wisely in technology, excellent marketing support, competitive products, and top-down corporate cultures greatly outperform their rivals in terms of advisor advocacy and satisfaction.
The study found a broad-based decline in advisor loyalty as all categories show greater risk of advisor attrition this year. With 15% of advisers in wirehouse businesses considering quitting the company in the next one to two years, this industry has the highest percentage of at-risk advisors. In the group of independent advisors, the at-risk percentage is 7%.
Among brand evangelist advisers, or those who have the greatest levels of satisfaction and commitment to their firms, 91% feel that their company's technology has advanced over the past two years. A strong culture is fostered by the corporate leadership of their company, according to 74% of these respondents, and 79% claim their company offers competitive products and services.
The study also found satisfaction tends to decrease with tenure. Employee advisers with at least ten years of experience are more satisfied overall (741 out of 1,000), while those with ten to twenty years of experience are less satisfied (689 out of 1,000) and those with more than twenty years of experience are least satisfied (658 out of 1,000).
And after two years of working from home, most advisers (62%) state that their ideal work style is either working full-time (24%) or most of the time in the office (38%). Advisors who are now based in the office full-time have the highest overall satisfaction ratings (791), followed by those who are based in the office most of the time (778).
