Satisfaction among advisors working under an employee model is on the rise, while satisfaction among independent advisors fell last year, according to JD Power's newest annual advisor mood survey.
JD Power found that satisfaction among employee advisors increased by 59 points between 2023 and 2024 to 637 (JD Power measures satisfaction levels on a 1,000-point scale). However, satisfaction among independent advisers fell to 611, a drop of 15 points.
According to the firm, this is a break from the norm, as independent advisors have historically been more satisfied than their employee counterparts.
The annual Financial Advisor Satisfaction Study examines satisfaction among advisors employed by a broker/dealer and those affiliated with ab/d but operating independently; This year's study included 4,072 respondents between January and May. The surveys probe advisers' opinions on compensation, leadership and strong culture, operational support, products and marketing, professional development and technology.
Employee advisor satisfaction increased last year, largely due to improved perspectives on compensation, technology and the quality of firms' operational support. On the independent side, more advisors are skeptical about their firm's leadership and future; only 46% of advisors reported that they “strongly agree” that their firm is going in the right direction, a drop of 8% from 2023. On the employee side, 49% strongly agreed that their firm was going in the right direction due this year, up slightly from 47% in 2023.
The firm updated its scoring scales in 2023 and redesigned the study itself in 2020, so direct comparisons of results cannot be made. However, these earlier results showed that independent advisors' satisfaction ranged from the 750s to the 780s for most of the previous decade, while employee advisors typically scored in the mid-700s.
Craig Martin, chief executive and head of wealth and lending intelligence at JD Power, said WealthManagement.com The “lure” of greater control and promised financial rewards in independent was attractive to many advisors, leading to more representatives moving into the independent space.
“During that time, as the surveys were updated, the data consistently showed that the average independent advisor had higher satisfaction ratings that resulted in a greater likelihood of staying and advocating for their firm,” he said. “The 2024 results are the first sign. that we may be reaching a level of balance where the differences between employee and independent models are being balanced and the impacts of growth and expansion in the independent sector are affecting adviser perceptions.”
Advisors who intended to stay at their firms for the long term tended to do so. About half of advisors who reported that they would “definitely” or “probably” not be at their firms two years from now in 2021 had left that firm by 2024. About 90% of advisors who said they would “definitely ” would remain at their firm in 2021 were still there as of this survey.
JD Power also asked advisors in this survey whether they intended to stay with their current firm for the next one to two years; 34% of employee advisors and 41% of independent advisors said they could not.
According to Martin, there were countervailing forces to challenge the loyalty of “even the most entrenched councillors”.
“Aggressive compensation offers, a promise of better technology or support and flexible business models can all entice advisers to switch firms,” he said. “However, the counselor's cultural fit and confidence in leadership is what determines how susceptible they are to attempts to seduce them.”
Last year's advisor satisfaction survey found that about 28% of advisors did not have enough time to spend with clients as they became further bogged down in administrative and compliance-related tasks. Advisors in this group reported spending an average of 41% more time per month than peers on “non-value-added” tasks.