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.