Wirehouse Wealth Management Firms Struggle to Keep Advisors Satisfied through Pandemic and Beyond

Despite the massive, industry-wide disruption caused by the COVID-19 pandemic, booming financial markets and significant gains in production have boosted overall financial advisor satisfaction this year. But not all advisors are feeling the warm glow of support from their firm. According to the J.D. Power 2021 U.S. Financial Advisor Satisfaction Study,^SM released this week, advisors working for wirehouse firms¹ generally indicate having significantly lower levels of support from their firm, greater disruption of business services and more difficulty transitioning to remote work than do those advisors working for non-wirehouse and independent advisory firms.

“Advisor satisfaction is directly linked to retention and brand advocacy, so firms that want to get the most out of their advisors need to invest in providing them with the best tools and support to do their jobs effectively under all circumstances,” said Mike Foy, senior director of wealth and lending intelligence at J.D. Power. “This year has been especially challenging, and this study identifies some firms that clearly did a better job than others in meeting those challenges.”

Following are some key findings of the 2021 study:

• Wirehouses fall short of advisor expectations: Despite payout rates and branding campaigns that suggest higher levels of support for advisors, wirehouse firms have fallen short of advisor expectations during the pandemic, with 34% of wirehouse advisors reporting reduced levels of support from the home office and 29% citing disruption of business services. In both cases, wirehouse advisors have experienced negative effects from the pandemic at approximately double the rate of non-wirehouse and independent advisors. Wirehouse advisors also cite higher levels of difficulty transitioning to remote work. Morgan Stanley is an exception as the only wirehouse that significantly improves from 2020. 
  
  
• Dissatisfied advisors more than three times as likely to switch firms: Tracking firm-level advisor satisfaction scores from 2018 through 2021, J.D. Power finds that 18% of advisors working for firms with the lowest overall advisor satisfaction scores ended up switching firms during that period. That compares with a switch rate of just 5% among the firms with the highest overall advisor satisfaction scores. The average annual production of defecting advisors is nearly $800,000 per year, and 63% of investors indicate they would likely leave their firm to follow their advisor if he/she left the firm.²
• Advisor satisfaction strongly linked to Net Promoter Score® (NPS)³: Across all advisor segments, satisfaction is strongly linked to advocacy as well as retention. Among the nearly one-third (32%) of advisors whose satisfaction is above 900 (on a 1,000-point scale), nearly all will promote their firm (NPS=97). Just 2% say they plan to leave their firm.
  
  
• Technology and operations support are common pain points for dissatisfied advisors: Among advisors who provide the lowest NPS scores, the most significant pain points are technology and operations support. Just 35% of these dissatisfied advisors say their firm’s technology offerings have improved in the past year and just 12% have had problem-free experiences with their firm during the past year.

Read the full press release here to find out who ranked highest in overall satisfaction among employee advisors and independent advisors

The J.D. Power U.S. Financial Advisor Satisfaction Study helps wealth management firms understand how effectively profiled firms are servicing their affiliated financial advisors - both employee advisors and independent advisors. Delivering a financial advisor experience that maximizes both loyalty and productivity is critical for success, given the risk of dissatisfied advisors taking clients to a competitor.

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For more information about the U.S. Financial Advisor Satisfaction Study, visit https://www.jdpower.com/business/resource/us-financial-advisor-satisfaction-study.

¹Merrill, Morgan Stanley, UBS and Wells Fargo Advisors
²Data is from J.D. Power 2021 U.S. Full-Service Investor Satisfaction Study^SM
3Net Promoter,® Net Promoter System,® Net Promoter Score,® NPS,® and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.