Even before the Great Resignation, broker-dealers were struggling to slow the departure of financial advisors and attract new professionals to the wealth management industry.

Technological advancements and pandemic-driven disruption have now added to that challenge, with 15% of advisors at wirehouse firms and 7% of independent advisors now categorized as “at risk” of leaving their firms in the next two years, according to the J.D. Power 2022 U.S. Financial Advisor Satisfaction Study, released today.

“Advisor loyalty is declining,” Mike Foy, senior director of wealth and lending intelligence at J.D. Power, told Financial Advisor Magazine. “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.

This is the first time J.D. Power created and used the brand evangelist category “to really differentiate between firms that create them and those that instead create advisors who are compliant passives—who aren’t looking to leave, but aren’t advocating on behalf of any broker-dealer’s brand or likely to recommend the firm to peers either,” Foy said.

“We’re taking a closer look because you need to do more than just prevent attrition, you need to create brand evangelists,” he said.

Among employee advisors, Edward Jones ranks highest in the study’s overall satisfaction category with a score of 876. Stifel (872) ranks second and Raymond James & Associates (863) ranks third.

Among independent advisors, Commonwealth ranks highest in overall satisfaction with a score of 918. Raymond James Financial Services (842) ranks second and Ameriprise (821) ranks third.

Morgan Stanley, which has invested millions to develop its wealth management platform and attract advisors is also gaining ground in terms of advisor satisfaction, Foy said.

“When we think about firms that are making culture shifts, Morgan Stanley is the best example of a wirehouse where we see significant improvements looking back over the past couple of years. They have really created some distance from their more direct peers in the wirehouse group,” Foy said.

Ameriprise is another firm where J.D. Power has seen improvements in terms of creating advisor loyalty, he added. “It’s not easy to change culture at firms of these sides when you’re dealing with 10,000 or 20,000 advisors who view themselves as small business owners, even if some aren’t literally. Changing culture is a long-term proposition,” Foy noted.

On the flipside, firms that have faced a number of public scandals and run-ins with regulators, such as Wells Fargo and Merrill Lynch, have taken a hit in the advisor retention and loyalty department, he noted.

“Right now, many firms are missing the mark by not developing that level of advisor engagement, but there are some clear drivers that need to be in place for it to happen,” Foy said.  Notably, firms that are making the right investments in technology, offer effective marketing support and competitive products and services offerings and have strong top-down corporate culture are significantly outperforming the competition when it comes to advisor satisfaction and advocacy, Foy added.

Other key findings of the 2022 study include:

• “Technology and competitive products and culture help build advisor advocacy. Among advisors classified as brand evangelists—those with the highest levels of satisfaction and loyalty to their firms—91% say the technology offered by their firm has improved during the past two years. Likewise, 79% say their firm offers competitive products and services and 74% say their firm’s corporate leadership fosters a strong culture,” J.D. Power found.

• Employee advisor satisfaction declines significantly with length of tenure. “While overall satisfaction among independent advisors is relatively consistent across all advisor tenure levels, it declines significantly among employee advisors based on the length of their industry tenure. Overall satisfaction is 741 (on a 1,000-point scale) among employee advisors in their first 10 years of tenure and falls to 689 among mid-career employee advisors and to 658 among those with a tenure of 20 years or more. This represents a huge risk as experienced advisors obviously have accumulated significant assets that will very often leave the firm if the advisor departs,” the research firm discovered.

• Last, but not least, advisors want to go back to the office, J.D. Power found. “A majority (62%) of advisors say their preferred work style is either in the office most of the time (38%) or in the office full-time (24%). Overall satisfaction scores are highest among advisors who are currently working in the office full time (791), followed by those who are working in the office most of the time (778),” the firm noted.

Foy said there is “a widening gap” between the better performing firms and the worst firms, that the industry should take note of. “I don’t think it’s shocking, but it’s clear that it will be easier for companies that create a strong band and develop brand evangelists to recruit and grow in the future,” he added.