© 2024 Arizent. All rights reserved.
Succession planning

Reducing attrition to drive growth

By Editorial Staff
January 4, 2017 12:02 PM

Succession planning for bank advisers begins with the notion of retention. Keeping advisers working at a bank for as long as possible will be better for the bottom line than watching them leave and then replacing them. That's one of the conclusions of a recent research report from Kehrer Bielan Research & Consulting.

Kehrer's report, which was sponsored by LPL, concluded that profit sharing was more successful than non-compete agreements, deferred compensation or equirty grants, as possible methods to stem adviser attrition.

Click through to see a handful of statistics from the research report.

JANInDepth_liticle.jpg
Janet Yellen, chair of the U.S. Federal Reserve, speaks during her semiannual report on the economy to the House Financial Services Committee in Washington, D.C., U.S., on Wednesday, July 15, 2015. Yellen said prospects are good for further improvement in the labor market and the economy, keeping the central bank on track for an interest-rate increase in 2015. Photographer: Drew Angerer/Bloomberg *** Local Caption *** Janet Yellen
Succession planning for bank advisers begins with the notion of retention. Keeping advisers working at a bank for as long as possible will be better for the bottom line than watching them leave and then replacing them. That's one of the conclusions of a recent research report from Kehrer Bielan Research & Consulting.

Kehrer's report, which was sponsored by LPL, concluded that profit sharing was more successful than non-compete agreements, deferred compensation or equirty grants, as possible methods to stem adviser attrition.

Click through to see a handful of statistics from the research report.
JANInDepthListicle1.png

Banks' staffing challenge

The average bank or credit union surveyed lost more than 11% of their adviser force in the year before the survey. There was a wide range, however, as some of the bigger banks (over 100 advisers) saw more than one-fourth their advisers leave.
JANInDepthListicle2.png

Why they quit

Of the advisers who left, just 9% retired or left the industry. Almost half, however, were recruited away by another firm.
JANInDepthListicle3.png

Lost production

Among advisers who have been in the industry for 10 years or more, the average revenue they produce is almost $400,000. The average for all advisers, regardless of tenure was just over $260,000.
JANInDepthListicle4.png

Shortfall

When a 12-year veteran leaves, $6.7 million in future revenue leaves with him or her. A replacement will make, on average, $3.4 million. The present value of that difference is a bit more than $2.5 million in lost revenue.
JANInDepthListicle5.png

Money walks after all

Experienced advisers (eight years of experience or more) will leave with $10 million of their AUM. (Other contributors have estimated that advisers will lure as much as half their AUM over time.)

Retention incentives

Banks have a number of carrot or stick options to keep advisers. Some work better than others. Profit sharing was among the most successful. Deferred comp and equity grants seem to have very little impact.
Editorial Staff
Succession planning Employee retention InDepth Industry Leadership Forum
MORE FROM FINANCIAL PLANNING