Which Firm Has the Happiest Advisors?

Wirehouse advisors are increasingly dissatisfied with their firms' comp plans and leadership at the same time that their counterparts at regional brokerages report being increasingly happy with their jobs, according to the latest J.D. Power study.

Edward Jones once again led J.D. Power's annual advisor satisfaction rankings, marking the sixth consecutive year that the St. Louis-based firm has topped the list. Raymond James & Associates, the firm's traditional employee broker-dealer, was the repeat runner-up.

Read more: 20K Advisors by 2020: Edward Jones Wants to Be the Biggest Broker on the Block

The study examines advisors' satisfaction with factors like professional support, compensation and firm leadership. And while a few firms raised their scores, overall satisfaction fell 20 points to 701 out of a possible 1,000 points, according to J.D. Power. Regional brokerage and independent advisors tended to report higher levels of satisfaction.

"Clearly, there is a big difference [between regionals and wirehouses]. I think it's partially because they have a unique culture. They're not part of a bank or larger enterprise," says Michael Foy, director of the wealth management practice at J.D. Power. "I think there's a perception that those cultures are much more focused on the advisor and wealth management because that's what they do."

Advisors at Edward Jones and Raymond James share are a strong culture and a belief in the leadership team, Foy adds. "I think that translates to not only higher levels of satisfaction, but we ask questions around loyalty, intention to remain with your firm -- so if you scratch below the surface of satisfaction, it's not only that their advisors are satisfied, but satisfied for the right reasons," Foy says.

At the same time that advisors report high satisfaction at the two firms, both are in the midst of expansion. Edward Jones is aiming to grow to 20,000 advisors from its current 14,000 by 2020 and Raymond James is recruiting heavily on the West Coast and in the Northeast.

COMP PLAN WOES

Compensation and firm leadership are key drivers of advisor satisfaction, Foy notes.

Overall, dissatisfaction with compensation rose, with half of advisors pointing to negative changes to comp during the past year, up from 41%.  A mere 9% of advisors said their comp plans improved.

Some firms, like Raymond James, made few or no changes to their comp plans. Among the wirehouses, Morgan Stanley increased the deferred component in their plan and Merrill added a requirement that an advisor or team introduce a client to another part of Bank of America, such as the consumer bank for lending.

While almost 90% of advisors said that their comp plans were aligned with corporate goals, only 64% said that their comp plans reward appropriate behavior.
"There may be a perception among some advisors that there is a conflict between the strategic objectives of the firm and their objectives as an advisor and what their clients' needs are," Foy says.

Meanwhile, loyalty to their firm has weakened somewhat among advisors. Though a majority say they'll probably or definitely stay with their current firm, only 43% said they would do so because their firm's culture, leadership or client focus.

Management was also a sore point for many advisors, with 42% of advisors saying that their firm's leadership fails to create a strong culture of accountability and 50% of advisors saying their immediate supervisor fails to keep his or her promises and commitments.

Just under half of advisors also say that management is not clearly communicating the firm's strategic goals.

This year Merrill Lynch's score dropped to 645 from 735 while UBS's score fell to 683 from 739.                

YOUNG AND HAPPY

Female advisors reported higher satisfaction than male advisors. There's also a generational difference among advisors, with younger advisors reporting higher levels of satisfaction than their older counterparts.

"I think a lot of that is attributable from the value they get from their firm based on their professional development. When you are starting out at the beginning of your career, you get a lot of help in terms of training, development, marketing," Foy says.

The study also shows that the industry remains slow in adopting certain new technologies. For example, over 90% of advisors say their firm provides tablet-friendly tools, but only a third of advisors actively use a tablet in their work.

Under a third of advisors said they used social media to communicate with clients, and 45% of advisors said their firm does not permit using social media tools to do so.

 

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