Edward Jones and Commonwealth Financial Network received the highest marks for advisor satisfaction in the 2014 U.S. Financial Advisor Satisfaction Survey by J.D. Power, released Monday.
The survey from the Westlake Village, Calif.-based consumer research company is based on the responses from 3,900 financial advisors who are employees of an investment services firm or are independent advisors associated with a broker-dealer. The rankings are based on scores of zero to 1,000.
Edward Jones ranks first in the employee advisor segment for the fifth year in a row with a score of 904. Raymond James & Associates Inc. (867) ranks second, followed by RBC Wealth Management (834).
In the independent broker-dealer category, Commonwealth Financial Network ranks highest for a fourth consecutive year with a score of 954. Cambridge Investment Research Inc. ranks second (913), followed by Raymond James Financial Services Inc. (899).
The study considers advisor/professional support, client/customer-facing support, compensation, firm leadership, operational support, problem resolution and technology support in determining the levels of advisor satisfaction. Overall satisfaction among employee advisors is 721, versus a score of 778 among independent advisors.
Compensation and firm leadership are the top factors driving advisor satisfaction, according to the survey. However, J.D. Power says firms need to look ahead and begin planning for a generational shift of retiring advisors during the next decade.
With one-third of today’s advisors expected to retire in the next decade, and with more experienced advisors considering the increased flexibility and financial benefits of becoming RIAs, investment firms need to mentor newer advisors and provide them with technology to have a competitive advantage over firms that do not, J.D. Power says.
“As financial markets continue to do well and overall advisor satisfaction remains relatively high, investment firms may be operating with a false sense of security for their future success,” says Michael Foy, director of the wealth management practice at J.D. Power. “To prepare for the future, investment firms need to implement effective processes to mentor and train young advisors and provide them with the technology and tools that will enable their success.”
Among advisors with less than 10 years of experience, the survey found those advisors who work at firms that offer training and mentoring programs have a higher degree of satisfaction (850) than advisors in firms without mentoring programs (730). However, 33 percent of advisors are not aware of whether their firm offers a mentoring program, suggesting that part of the challenge is related to effective communications, J.D. Power says.