Satisfaction among advisors working under an employee model is on the rise, while independent advisor satisfaction dropped in the past year, according to the newest annual survey of advisor moods by J.D. Power.
J.D. Power found that satisfaction among employee advisors rose 59 points between 2023 and 2024 to 637 (J.D. Power measures satisfaction levels on a 1,000-point scale). However, satisfaction among independent advisors dropped to 611, a 15-point decline.
According to the firm, this is a break from the norm, as historically, independent advisor satisfaction has been higher than that of their employee peers.
The annual Financial Advisor Satisfaction Study examines satisfaction among advisors employed by a broker/dealer and those affiliated with a b/d but operating independently; this year’s study included 4,072 respondents between January and May. The surveys probe advisors’ thoughts on compensation, firm leadership and culture, operational support, products and marketing, professional development and technology.
Employee advisors’ satisfaction jumped in the past year, mainly due to improving outlooks on compensation, technology and the quality of firms’ operational support. On the independent side, more advisors are skeptical of their firm’s leadership and future; only 46% of advisors reported they “strongly agree” their firm is heading in the right direction, an 8% drop from 2023. On the employee side, 49% strongly agreed their firm was heading in the right direction 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 score comparisons can’t be made. However, those previous scores did show that independent advisor satisfaction ranged from the 750s to the 780s during most of the previous decade, while employee advisors typically scored in the low to mid-700s.
Craig Martin, the executive managing director and head of wealth and lending intelligence at J.D. Power, told WealthManagement.com the “lure” of greater control and financial rewards promised in independence was attractive to many advisors, leading to more reps 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 to stay with and advocate for their firm,” he said. “The 2024 results are the first sign that we may be reaching a level of equilibrium where the differences between the employee and independent models are balancing out and the impacts of growth and expansion in the independent sector are having an impact on advisor perceptions."
Advisors who intended to stay at their firms for the long term tended to do so. About half of advisors who reported they “definitely” or “probably” would not be at their firms in two years’ time in 2021 had left that firm by 2024. About 90% of advisors who said they would “definitely” remain at their firm in 2021 were still there as of this survey.
J.D. Power also asked advisors in this survey if they intended to remain with their current firm for the next one to two years; 34% of employee advisors and 41% of independent advisors said they may not.
According to Martin, there were countervailing forces to challenge the loyalty “of even the most entrenched advisors.”
“Aggressive compensation offers, a promise of better technology or support and flexible business models can all tempt advisors to change firms,” he said. “However, the cultural fit and advisor confidence in leadership are what determine how susceptible they are to attempts to lure them away.”
Last year’s advisor satisfaction survey found that about 28% of advisors didn’t have enough time to spend with clients as they became further ensnared by administrative and compliance-related duties. Advisors in this group reported spending an average of 41% more time monthly than peers on “non-value-added” tasks.
