More than a third of advisors are considering switching firms, says JD Power

It looks like loyalty is dead in the wealth advisory space, as a significant portion of financial advisors in the US are contemplating a change in their employment, according to the JD Power 2024 US Financial Advisor Satisfaction Study.

According to the survey, which took responses from 4,072 employee and independent financial advisors from January through May 2024, 34 percent of employee advisors and 41 percent of independent advisors who are more than two years from retirement may leave their current firms within the next one to two years.

A significant chunk of advisors aren’t first-time defectors either, as 28 percent of employee advisors and 52 percent of independent advisors have already worked for three or more firms during their careers.

Craig Martin, executive managing director and head of wealth and lending intelligence at JD Power, sees several crosscurrents at work to tempt even the most loyal advisors to switch teams.

“Aggressive compensation offers, a promise of better technology or support and flexible business models can all tempt advisors to change firms,” Martin said in a statement. “However, the cultural fit and advisor confidence in leadership are what determine how susceptible they are to attempts to lure them away.”

The survey found increased satisfaction among employee advisors, who are seeing significant improvements in compensation-related metrics, perceptions of technology, and quality of support at their employer firms. Meanwhile, independent advisors are growing increasingly disenchanted due to leadership-related issues, with fewer advisors strongly agreeing that their firm is headed in the right direction—dropping from 54 percent in the 2023 edition of the study to 46 percent in 2024.

Satisfaction among employee advisors has risen by 49 points year-over-year, reaching 637 on a 1,000-point scale. In contrast, independent advisors' satisfaction has decreased by 15 points, resulting in a score of 611 and snapping the historical trend of independents being more satisfied than their employee counterparts.

The study also found intended attrition can be quite a powerful predictor of actual advisor attrition. Approximately half of the advisors who indicated in 2021 that they “definitely will not” or “probably will not” be at the same firm in one to two years had indeed left by 2024. On the flip side, about 90 percent of those who said they “definitely will” stay were still with their firms over the same period.

Unsurprisingly, culture and leadership proved to be an influential magnetic force for advisor retention. Advisors who are committed to staying with their firms rate their leadership and culture significantly higher compared to those considering leaving. After that, advisors tended to stay for the sake of professional development opportunities, especially less-tenured professionals with a lot of career years ahead of them.

Among wealth firms with employee advisor models, Stifel ranks highest in overall satisfaction for the second consecutive year, with a score of 767. Raymond James & Associates follows with 750 points, and Edward Jones ranks third with 740 points. Notably, Wells Fargo Advisors achieved the largest year-over-year increase in satisfaction, rising 156 points to 563.

On the independent side, Commonwealth cements its standing in the top position for the 11th consecutive year, scoring 819. Raymond James Financial Services ranks second with 694 points, and Cambridge takes third place with 676 points.