Advisors are becoming disenchanted with their investment firms, for two reasons: one is money and the other is confidence.
So says the J. D. Power 2015 U.S. Financial Advisor Satisfaction Study, which looked at both employee advisors—those working for their investment firms—and independent advisors. And independent advisor satisfaction levels scored higher than those of employees.
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The report examined seven factors that it identified as key drivers of advisor satisfaction: advisor/professional support; client/customer-facing support; compensation; firm leadership; operational support; problem resolution; and technology support.
It then scored advisor satisfaction levels on a 1,000-point scale.
Overall satisfaction for employee advisors came in at 701, down 20 points from last year, and money was at the root of a lot of dissatisfaction. Fifty percent of employee advisors said there were negative changes to their payout within the past year; in 2014, 41 percent said that. Only 9 percent said their compensation plans had improved.
And, despite the fact that firms generally want to retain advisors with the most assets under management, they were the ones reporting more negative impact on their compensation.
Advisors with higher assets under management ($150 million or more) were more unhappy than advisors with less than $50 million AUM.
In addition, employee advisors thought compensation plans were more aligned with corporate goals (86 percent) than with rewarding appropriate behaviors (64 percent), reflecting the perception among some advisors that there is pressure to sell products and services that might not be optimal for their clients.
And that segued into dissatisfaction with leadership, both corporate and local.
Nearly half (42 percent) of employee advisors said that firm leadership fails to create a strong culture of accountability, and 50 percent indicated that their immediate supervisor fails to keep promises/commitments.
Many advisors also said effective top-down communication is lacking, with only 43 percent saying that leadership clearly communicates strategic goals.
Independent advisors, on the other hand, had an overall satisfaction level of 773—72 points higher than employee advisors. And they were happier not just with the money aspect of the relationship, but also with corporate leadership.
Seventy-two percent of advisors indicate their compensation remained the same from 2014, while 11 percent said it had improved. And 81 percent of independents said compensation rewards appropriate behaviors.
Also among independents, 49 percent said firm leadership creates a strong culture of accountability, and 45 percent said corporate leadership clearly communicates strategic goals.
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