The financial advisory industry is experiencing a notable shift, with over one-third of advisors expressing openness to changing broker-dealers. This phenomenon, often referred to as being “in motion,” signifies a readiness among advisors to move to firms offering better products, advanced technology, and enticing transition packages. The latest satisfaction study by J.D. Power sheds light on the reasons behind this trend and its implications for the industry.

Key Findings from the J.D. Power Study

The J.D. Power study highlights several factors contributing to advisors’ willingness to switch firms. Key among these are an aging sales force, industry consolidation, and challenges in prospecting new clients. These issues are making it increasingly difficult for firms to retain their advisors.

According to the survey, approximately 34% of employee advisors who are more than two years away from retirement are uncertain about staying with their current firm over the next one to two years. This sentiment is even more pronounced among independent advisors, with over 41% considering a change of firms.

Craig Martin, head of wealth and lending intelligence at J.D. Power, noted that “aggressive compensation offers, a promise of better technology or support, and flexible business models” are key factors tempting advisors to switch firms.

Satisfaction Levels and Trends

The study revealed interesting trends in satisfaction levels among different types of advisors. Employee advisors reported higher satisfaction levels compared to previous years, with their satisfaction score increasing by 49 points year-over-year to 637 on a 1,000-point scale. In contrast, independent advisors’ satisfaction dropped by 15 points to 611.

“This is particularly noteworthy given that historically satisfaction scores among independent advisors have been higher than among employee advisors,” the study stated. This shift indicates a growing discontent among independent brokers, who have traditionally enjoyed higher satisfaction levels.

Perception of Firm Direction

Another critical finding from the study is the perception of the direction in which firms are heading. Only 46% of independent brokers strongly agreed that their firm is headed in the right direction, a significant drop from 54% in 2023. This declining confidence further underscores the restlessness among independent advisors.

Retention and Mobility

The challenge of retaining brokers is compounded by the fact that, since 2021, approximately half of those who indicated a likelihood of moving have indeed left their firms. This trend demonstrates the tangible impact of the factors driving advisors to consider new opportunities.

Some firms, on the other hand, have been making strides in improving compensation metrics, technology, and support, which have likely contributed to the rise in satisfaction among employee advisors.

Are You Ready To Roll?

The financial advisory industry is at a crossroads, with a significant portion of advisors open to changing broker-dealers. As firms navigate the challenges of an aging sales force, industry consolidation, and client prospecting difficulties, the ability to offer competitive compensation, superior technology, and robust support will be crucial in retaining top talent.

For those ready to explore their options and take the next step in their professional journey, now is the time to act. Visit 3xEquity to learn more and get started on your transition today.