- True Loyalty Achieved by Meeting Core Needs and Having Strong Cultural Connection
July 11, 2024
Troy, MI (Highpoint Digest) − The aging U.S. financial advisor population, industry consolidation and slowing organic growth rates create potential challenges for future advisor retention. According to the J.D. Power 2024 U.S. Financial Advisor Satisfaction Study,SM released today, 34% of employee advisors and 41% of independent advisors who are more than two years from retirement say they may not stay with their current firm in the next one to two years. This is particularly noteworthy given that 28% of employee advisors and 52% of independent advisors have worked for three or more firms during their career.
“Several forces are currently at play that pose challenges to the loyalties of even the most entrenched advisors,” said Craig Martin, executive managing director and head of wealth and lending intelligence at J.D. Power. “Aggressive compensation offers, a promise of better technology or support and flexible business models can all tempt advisors to change firms. However, the cultural fit and advisor confidence in leadership are what determine how susceptible they are to attempts to lure them away.”
Following are some key findings of the 2024 study:
- Drivers of changing satisfaction: Key factors that have driven the major gains among employee advisors in the past year are related to significant improvement in compensation-related metrics, perceptions of technology and quality of support. Among independent advisors, some of the key reasons leading to a year-over-year decline in satisfaction are leadership related, with significantly fewer advisors saying they “strongly agree” that their firm is headed in the right direction, down to 46% in 2024 from 54% in 2023.
- Intended attrition equals real attrition: Using a multi-year analysis, J.D. Power finds that among advisors who said in 2021 they “definitely will not” or “probably will not” be at the same firm in one to two years, approximately half were no longer at that firm in 2024 At the same time, approximately nine in 10 advisors who said they “definitely will” still be at their firm were still there in that same period.
- Culture and leadership are critical to advisor retention: Comparing ratings provided by advisors committed to staying with their firm with those open to leaving, ratings for firm leadership and culture reflect the greatest differences. Among advisors who are less tenured at their firm, professional development is the area next greatest difference.
- Satisfaction improves among employee advisors, declines among independents: Satisfaction among employee advisors rises a significant 49 points year over year to 637 (on a 1,000-point scale). In contrast, overall satisfaction among independent advisors is considerably lower (611) and reflects a significant 15-point year-over-year decline. This is particularly noteworthy given that historically satisfaction scores among independent advisors have been higher than among employee advisors.
Study Rankings
Among employee advisors, Stifel ranks highest in overall satisfaction for a second consecutive year, with a score of 767. Raymond James & Associates (750) ranks second and Edward Jones (740) ranks third. Notable is that Wells Fargo Advisors has the largest year-over-year increase in overall satisfaction in the study, increasing 156 points to 563.
Among independent advisors, Commonwealth ranks highest in overall satisfaction for an 11th consecutive time, with a score of 819. Raymond James Financial Services (694) ranks second, and Cambridge (676) ranks third.
The U.S. Financial Advisor Satisfaction Study measures satisfaction among both employee advisors (those who are employed by their broker dealer) and independent advisors (those who are affiliated with a broker-dealer but operate independently) based on six key dimensions (in alphabetical order): compensation; firm leadership and culture; operational support; products and marketing; professional development; and technology.
The study is based on responses from 4,072 employee and independent financial advisors and was fielded from January through May 2024.
Source: JD Power
Photo courtesy of JD Power
