J.D. Power on how firms can improve advisor satisfaction

August 11, 2023 4:38 PM

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Money talks, but it isn't everything to advisors, who industry-wide have reported a sizable lack of engagement with their jobs in recent months, according to business research and consulting firm J.D. Power.

"Advisors … are craving information on how to be better businesspeople, how to create relationships, how to manage my practice," said Keith Bossey, a managing director at J.D. Power, in an industry panel webinar Thursday called "Increasing Advisor Satisfaction: The Power of Collaboration and Professional Development."

However, Bossey said, the firm's research showed that "less than half of advisors rated their firm in the top two (levels) on professional development" in its rating scale, reflecting that many feel unsupported in reaching their full potential at their current jobs.

The webinar shared and discussed additional findings from a J.D. Power report released in July that polled over 4,000 advisors at both employee and independent firms to learn about what they needed to stay engaged in their work and what was missing in their current firms.

Other panelists at the event included moderator Anita Heisl, the chief engagement officer at 4U Platform and Julie Genjac, the vice president and managing director of applied insights at asset management company Hartford Funds.

4U Platform is a fintech company that streamlines secure, compliant content-sharing among different wealth management industry firms. 4U clients include Raymond James, Morgan Stanley, Morningstar and T. Rowe Price. Hartford is a client of 4U and frequently shares professional development content on its platform, Genjac said in the event, adding that it also offers trainings in different settings to advisors around the industry.

Scroll down for three key takeaways from the webinar and to learn how firms can improve their engagement with their advisors.

Time-starved advisors are less loyal

"They say time is the most important currency," Bossey said. "We saw that more than one in four advisors feel that they do not have enough time to spend with clients," adding that the problem was present on both the employee and independent side.

Time-starved advisors spent 40% more time on "non-value-added tasks" like compliance and administration, which took them away from being present to answer client questions and guide them through actual planning. Often one of the underlying problems was "subpar support," Bossey said. In particular, "More than 40% of advisors did not agree that their firm provided effective marketing support that would enable them to grow their practice."

Bossey said the net promoter score (NPS) of a time-pressed advisor, which measures their loyalty to the firm, is "less than half of the average advisor — so it drops from 51 down to 23." In addition, "satisfaction with leadership and culture is 40% lower, if that advisor feels time pressed."

Beyond talent retention, there's also the problem of stalling growth for advisors who are time-poor. Heisl said that in her experience in the industry, "What I've seen very consistently over time, is that when advisors become too bogged down with time, the first thing that goes by the wayside is their growth strategy."

Transcending 'transactional' advice

Advisors want less on selling, more on service, from their firms, the panelists said.

"A lot of the training goes around products, and selling and not so much practice management, and how to be better at being an advisor," Bossey said.

The irony is that better service to clients tends to result in better growth for the business of the advisor and their firm, Bossey said, adding that all the key performance indicators that J.D. Power had identified in the past couple of years for a strong client-advisor relationship centered around whether the client felt an advisor was treating them with personalized attention, making recommendations in their best interests and being proactive as "an integral part of the client's life."

Bossey said J.D. Power rated client experiences of their advisors at three levels: the worst being transactional, the middle being goals-based, the best being comprehensive.

Unfortunately, Bossey said, only 11% of client-advisor relationships were comprehensive. Forty-two percent of all client experiences "fall in that transactional area." Client loyalty to an advisor and advocacy for them, measured by NPS, was only 38 for transactional relationships but 88, a vast majority, for comprehensive relationships, Bossy said.

Retirement and longevity planning are hot topics

So in what areas do advisors most want help serving their high net worth or ultrahigh net worth clients? While this depends on the life stage of the client, Genjac said one area in particular stands out as a valuable topic for professional development investment: helping clients through retirement and more broadly, longevity — how to plan around life in retirement.

"It is a lot of years at the end of one's life, that oftentimes we don't spend a lot of time unpacking," she said.

Hartford Funds partners with Joe Coughlin, the founder and director of the MIT AgeLab, for help delivering research-informed advice on long-term planning to financial professionals that they can share with clients. The partnership has created modules around topics such as "quality of life, 8,000 days, building your longevity network, just to name a few."

"'There's a big difference between having a plan, and being prepared to implement the plan,'" she said Coughlin often would say. "Oftentimes the wheels must be in motion for many of those pieces, years, and maybe even decades in advance."