Indie reps happier at work than employee advisers: J.D. Power

But gap narrows as indie satisfaction drops, employee satisfaction rises

By Minda Smiley

Jun 30, 2014 @ 8:00 am (Updated 1:11 pm) EST

j.d. power, job satisfaction, independent, broker-dealer

Independent advisers continue to be happier at work than their colleagues who are employees of broker-dealers but the gap in job satisfaction between the two groups is narrowing.

The 2014 job satisfaction score of independent advisers dropped 16 points from a year earlier to an average of 778 (based on a 1,000-point scale). Meanwhile, job satisfaction among advisers employed by a broker-dealer climbed 26 points to an average of 721, according to a survey of nearly 4,000 advisers released Monday by J.D. Power Associates.

“For many advisers who are employees, they like the turnkey business model. They have a platform where they can focus on clients without the distraction of running a business,” said Mark Elzweig, executive search recruiter at Mark Elzweig Co. Ltd. “In the independent space, compliance rules and regulations are ever increasing and it's made running an independent practice more challenging.”

Edward Jones' advisers ranked the happiest of those working for a broker-dealer, with a score of 904, and those at Commonwealth Financial Network ranked highest in satisfaction among the independents, with a score of 954.

“Advisers and their assistants are constantly giving us feedback on how to make Commonwealth better,” said Wayne Bloom, chief executive of Commonwealth Financial Network. “When they see their suggestions being acted upon and technology being reshaped, it really empowers our clients to give us more feedback because they see it's not just lip service.”

THE BREAKDOWN

Among employee advisers, firms that scored above the industry average also included Raymond James & Associates Inc. (867), RBC Wealth Management (834), UBS Financial Services (739), Merrill Lynch Wealth Management (735) and Charles Schwab & Co. (732). Those scoring below the industry average: Wells Fargo Advisors (690) and Morgan Stanley Wealth Management (596).

“Raymond James was right up there and from what I've been seeing with them the last year or so, they've become a recruiting juggernaut,” said Howard Diamond, managing director and chief operating officer of Diamond Consultants. “They've been bringing in some really good talent.”

Looking at independent advisers, firms that scored above the industry average include Cambridge Investment Research (913), Raymond James Financial Services Inc. (899), Cetera Financial Group (803) and Ameriprise Financial Inc. (797). Those below the average satisfaction score were LPL Financial (755) and Advisor Group (747).

“LPL has a very broad-based platform. Some advisers feel that it's expensive,” Mr. Elzweig said of the nation's largest independent broker-dealer, which provides services to more than 13,500 advisers. “It's such a large firm and some advisers don't feel they have the same kind of access that they formally had. In other words, they have grown.”

The study, which was conducted between January and April, measured adviser satisfaction about firm performance, compensation, ability to resolve the adviser's problems, the people they work with, their job duties and the service and support they receive, among other factors.

“Firms are challenged to be able to retain their high-performing advisers through the end of their careers but also be prepared to train new advisers as senior advisers go into retirement,” said Michael Foy, director of wealth management practice at J.D. Power.

The study found that training and mentoring has a positive impact on satisfaction for advisers at various stages in their career.

EXPERIENCE MATTERS

Satisfaction is higher among less experienced advisers (fewer than 10 years) who participate in a mentoring program compared with those who do not participate (850 vs. 730, respectively). Yet 33% of advisers are not aware of whether their firm offers a mentoring program, suggesting that part of the challenge has to do with communication.

“It's not enough for these firms to develop these programs and build these great tools. It's important that they make sure advisers know what is available for them,” Mr. Foy said.

When it comes to satisfaction with technology, 84% of advisers using smartphones or tablets say their firm provides smartphone and tablet-friendly tools, but only 28% said they use both devices for business reasons.

“You have to not only build the tools," Mr. Foy said, "but make sure that advisers are aware of and can take advantage of these tools.”

Kristen Luke, president and CEO of Wealth Management Marketing, Inc. said sometimes the tools are not very helpful. “While they might be out there, the adviser might find it to not be very useful,” she said.

For example, apps from custodians are only helpful for advisers if the adviser only works with one custodian. “But if you're working with multiple, then advisers can't get an accurate picture for their clients,” Ms. Luke said.

SOCIAL MEDIA

Nearly one half of employee advisers and 20% of independent advisers indicated their firm does not allow the use of social media when it comes to communicating with clients.

“Independent advisers often have a little more flexibility. Firms might have rules that are stricter than necessary in order to control and manage social media,” Ms. Luke said.

Of those who can use social media, 45% of employee advisers and 40% of independents actually do.

“Social media has become so pervasive and it's such an expectation, particularly for younger advisers. For advisers to continue to have value, they are going to have to figure out a way to succeed in that medium,” Mr. Foy said.