Kehrer Bielan research has demonstrated that unwanted advisor attrition costs a firm $2 million when the advisor leaves for another firm, yet financial institutions continue to churn advisors, losing advisors every year and replacing them, only to lose a similar number the following year. The net effect is barely any growth in advisor headcount, despite growing opportunity in the institution’s client base. Data from a new complimentary study by Kehrer Bielan indicates that the large banks that own their own broker dealer have made progress in reducing their high advisor attrition rates by 25% over the past 3 years.
On the other hand, the banks and credit unions that partner with 3rd party broker dealers experienced an uptick in their advisor attrition rate, almost doubling to 15%.
Retaining advisors is challenged by heightened competition for a shrinking supply of advisors. The advisor population is aging—30% of advisors are over age 70, and there are more advisors over age 80 than under age 30. The traditional sources of advisor training have dried up, and the press tells us that the younger generations are not attracted to the profession.
Another major finding of the survey is that more institutions are growing their own advisors, instead of poaching them from other institutions or nonbank firms. Not only does this trend alleviate the pressure on recruiting, it appears to also reduce attrition. The “grow-your-own” advisor programs are concentrated in the banks that own their own broker dealer. Management in those banks report that advisors who have worked their way up from non-registered positions are much more loyal to the firm than advisors who move from firm to firm every few years for another transition package
The survey was conducted during the spring and summer, and encompassed 67 banks and credit unions that collectively employ 4,001 advisors.
The survey is part of a broader Kehrer Bielan study of where the next generation of advisors is coming from, commissioned by Cetera Financial Institutions, to:
- Study how financial institutions find new advisors;
- Identify banks and credit unions that are having success recruiting both first career and second career advisors; and
- Distill best industry practices.
To obtain a complimentary copy of the study, click here.
Cetera Financial Institutions is a marketing name of Cetera Investment Services LLC, a self-clearing registered broker-dealer who delivers customized investment and insurance solutions to financial institutions nationwide. Cetera Investment Services helps institutions expand their financial offerings, which allows clients to pursue their financial goals through a holistic approach while delivering sound and strong financial solutions. Advisory services are offered through Cetera Investment Advisers LLC, an SEC registered investment adviser firm, where financial advisors receive a wide array of solutions and back-office support, so that they can focus on clients.
Cetera Investment Services LLC and Cetera Investment Advisers LLC are members of Cetera Financial Group®, Inc., which provides leading wealth management and advisory platforms and innovative technology to financial advisors and financial institutions nationwide. Cetera Investment Services is a member of the Depository Trust and Clearing Corporation (DTCC), the Securities Investor Protection Corporation (SIPC), and the Financial Industry Regulatory Authority (FINRA).
For more information, visit ceterafinancialinstitutions.com