Fading advisor loyalty means stakes are high

In cliché corner, loyalty is variously a virtue, a two-way street, or rare. In the wealth management industry, at least, it’s crystal-clear firms are going to have to work hard to win loyalty of any kind.

If our previous editorial – “War for talent the next battleground" – warned of the impact on a firm’s organic growth if talent retention slips, a recent J.D. Power survey has laid bare the number of wantaway advisors.

The J.D. Power 2024 US Financial Advisor Satisfaction Study reported that 34 per cent of employee advisors and 41 percent of independent advisors who are more than two years from retirement admit they may not stay with their current firm over the next one to two years. Reinforcing this wanderlust, 28 percent of employee advisors and 52 percent of independent advisors have worked for three or more firms during their career.

Some of the reasons put forward are predictable – better compensation, better technology, and more flexible business models. Interestingly, though, a firm’s leadership is also a key driver of the mood music among advisors. Fewer advisors year on year say they “strongly agree” their company is heading in the right direction, down to 46 percent from 54 percent in 2023.

There are also clues that the lure of independence is not infinite. Satisfaction among employee advisors rose in 2024 while overall satisfaction among independent advisors declined, flipping the historical norm.

Taken all together, what do these findings mean? Well, it seems at least a third of advisors are logging off after a hard day’s work cursing their paycheck, their firm’s culture, or its ineffective C-suite. In the evening, these same advisors are likely plotting their next move. The report details the strong link between intended attrition and real attrition. The message: the war for talent could make or break your firm in the next two years.

Joe Duran, the founder of RIA United Capital and now Rise Growth Partners, and never a man to duck a zinging soundbite, says the majority of RIAs are “monkey see, monkey do.” Just like clients, advisors want a clear value proposition from their employer.

This obviously includes a competitive compensation package, top-notch tech and support, and, for some, freedom to operate how they want. It also includes a cultural fit and leadership they believe in. Firms that try to be all things to all people will struggle to establish an identity that resonates with the personalities they want to attract. Taylor Swift is not writing her songs for Black Sabbath fans, for example. By the same token, wealth firms must understand who their target advisors are.

Even with a stellar package in place, the relationship is just beginning, and the hard work is yet to really begin. After all, loyalty is earned, not given.