J.D. Power adviser satisfaction study
Firms striving to retain top talent have their work cut out for them in an industry rife with disruption, according to a new study.

Employee advisors with production greater than $1 million gave their firms worse job satisfaction marks than their lower-producing colleagues, J.D. Power found in a survey released last month. Independent advisors rated their broker-dealer firms higher, but their satisfaction fell for the third straight year.

J.D. Power’s annual survey linked the growing discontent to the uncertainty surrounding the fiduciary rule, changes to firms’ compensation, frustrations with leadership and the impact of technology, says Mike Foy, the consulting firm’s director of wealth management.

The space is “in a period of transformation,” Foy says. “There are things happening that have the potential to change the fundamental nature of the industry.”

More than 2,700 advisors submitted answers through mail and email surveys between January and April, he notes. Each advisor rated their firms on a 1,000-point scale in seven categories, including pay, leadership, professional development, technology and client support.

Click through the slideshow to see how the changes have roiled advisors' attitudes about their firms.
Employee adviser rankings J.D. Power
Edward Jones has won J.D. Power’s employee advisor satisfaction rankings every year that the consulting firm had large enough sample sizes to pronounce a winner since 2007, according to Foy. Raymond James took second place, while three of the four wirehouses received below-average marks.

“The bigger gaps are really related to the leadership and the culture,” Foy says. “One advantage that firms like Edward Jones and Raymond James have is that their primary business is wealth management.”
Independent adviser firm rankings J.D. Power
Commonwealth Financial Network, which Foy notes is also a frequent winner, topped the satisfaction rankings among independent advisors. The independent BD received a score of 946, surpassing its nearest rival, Ameriprise, by 19%.

J.D. Power also spoke with independent advisors at Raymond James Financial Services, Cambridge Investment Research, Cetera, Advisor Group and the Wells Fargo Financial Network. The firm did not receive enough answers from advisors at those firms to include the firms in the rankings, Foy says.
Employee and indie advisers satisfaction J.D. Power
Independent advisors have reported higher overall job satisfaction than employee advisors each of the past four years. The two groups’ ratings have been moving closer in recent years, though.

Both groups’ satisfaction dropped three points this year. Satisfaction among independent advisors has fallen by 26 points since 2014, while satisfaction among employee advisors has ticked down by only two points in the same span.
Top producers less satisfied J.D. Power
The disparity in job satisfaction between employee advisors with production over $1 million and those below should give firms pause, Foy says. The established, top-producing employee advisors are “the folks that firms are most concerned about retaining,” he notes.

Such advisors’ satisfaction shrank 27 points over the past year, while the lower-producing advisors reported only a nine-point reduction.
Advisers production and satisfaction J.D. Power
Production did not affect employee advisors’ scores with respect to compensation and professional development. It did, however, pose a negative impact on advisors’ view of their firm’s leadership, operational and client support and technology.

Lower-producing employee advisors in particular gave their firms 9% higher ratings for operational support. The negative correlation between production and satisfaction jibes with past surveys of advisors, according to Foy.

Firms are “very valuable to FAs at the start of their career” but become less so as advisors advance in the profession, he says.
Compensation changes survey J.D. Power
Pay policies have changed for the worse for more than half of the employee advisors surveyed by J.D. Power. The number reporting negative alterations to their pay rose 10 percentage points to 51% from 2016, according to Foy.

The 49% of employee advisors whose payout rules stayed the same or improved gave their firms an average rating of 824. On the other hand, those displeased with the compensation changes at their firms gave an average overall score of 618.
Adviser compensation survey J.D. Power
Nearly four in 10 employee advisors do not fully understand their firms’ total compensation packages, according to the survey. Some 35% of the advisors said they only partially understand their pay, while 2% don’t understand it at all.

“It’s a persistent problem,” Foy says, noting that the fiduciary rule’s impact on recruiting bonuses added to such concerns in this year’s survey.
Adviser firm leadership survey J.D. Power
Most employee advisors do not strongly agree that their firms’ leadership is moving the company in the right direction. Wirehouse executives in particular should take the findings as a message that they need to be “as transparent and accessible to FAs as they can be,” Foy says.

“In many cases, advisors feel like either executive management doesn’t value what they do or doesn’t put them at the center of what they’re doing,” he says.
Advisers supervisor survey J.D. Power
Most employee advisors also do not strongly agree that their immediate supervisor is available when needed and helps them succeed, according to the survey. Only 43% praised their managers as living up to those two traits.
Employee v. independent advisers on fiduciary
Both employee and independent advisors expressed confusion and unease with the Department of Labor’s fiduciary rule.

Independent advisors reported that they don’t completely understand the rule at a higher rate than employee advisors. And 63% of independent advisors expect the rule to cut into profits at their firms, compared with 58% of employee advisors.
Employee adviser fiduciary J.D. Power
Half of employee advisors either strongly or somewhat disagree with the view that the fiduciary rule is a good thing for investors. Less than 40% of them agree that the regulation will help clients, while 11% expressed no opinion one way or the other.

The rule has prompted firms to make a series of expensive changes, and employee advisors echoed their firms in arguing that smaller investors would no longer make viable clients under the rule. Some 64% of the advisors strongly or somewhat agreed that the rule would force them to lose smaller clients.