Financial services firms are under pressure to retain advisors at a time when the U.S. advisor population is aging, industry consolidation is underway and organic growth rates are slowing, according to the J.D. Power 2024 U.S. Financial Advisor Satisfaction Study.
The study, released Wednesday, found that 34% of employee advisors and 41% of independent advisors who are more than two years away from retirement may not remain at their current firm in the next year or two.
J.D. Power said this is noteworthy considering 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," Craig Martin, head of wealth and lending intelligence at J.D. Power, said in a statement.
"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."
The advisor satisfaction study measures satisfaction among both advisors who are employed by a broker-dealer and those who are affiliated with a broker-dealer but operate independently, based on these dimensions: compensation; firm leadership and culture; operational support; products and marketing; professional development; and technology.
The new study, which was fielded from January through May, is based on responses from 4,072 employee and independent financial advisors.
What Makes Advisors Stay?
Significant improvement in compensation-related metrics, perceptions of technology and quality of support have driven major gains among employee advisors in the past year, the study found.
Among independent advisors, however, satisfaction declined significantly year over year for leadership-related reasons. Those who said they strongly agree that their firm is headed in the right direction dropped to 46% this year from 54% in 2023.
J.D. Power used a multi-year analysis to measure attrition among advisor respondents. Researchers found that of those who said in 2021 that they definitely or probably would not be at the same firm in one to two years, about half were no longer at that firm in 2024.
