AdvisorHub Culture Study Part 4: How Culture Impacts Financial Advisors Considering A Transition
Culture plays a powerful role in influencing the decision to join a financial services firm. An Edward Jones financial advisor and industry recruiters weigh-in.
The decision to change firms is deeply personal for every financial advisor, but there are common themes that influence these decisions. Jessica Barron spent eight years building a career as a financial advisor at a well-known national brokerage firm. But in April 2019, she made the switch to Edward Jones because she wanted the freedom to build a practice on her own terms.
“It was my dream to serve clients but have my own practice as a financial advisor,” says Barron, who is based in Rolla, Missouri. “When I transitioned to Edward Jones, it was an opportunity to build my business, while getting the support I needed to succeed. I have the independence I was looking for, but I never feel alone.”
Barron wanted independence and work-life flexibility – while also receiving institutional support – and she’s not alone. In the AdvisorHub study on brokerage-firm culture done in partnership with Edward Jones, more than 500 respondents listed their top reasons for leaving a firm and joining a new one. The study shows that cultural factors deeply influence financial advisors’ decision making.
What makes a firm attractive to recruits? It’s no surprise that compensation ranked first, but the study showed other top reasons for joining a firm include the technology, a desire for independence, work-life flexibility, and supportive management.
Top Attributes Attracting Financial Advisors to a New Firm
The study affirmed the importance of culture in both attracting and retaining financial advisors. When asked why they would consider leaving their current firm, financial advisors reported their top reasons for leaving a firm as corporate changes such as an unwanted merger, lack of administrative support and poor management.
Top Reasons Why Financial Advisors Would Consider Leaving Their Current Firm
Professional recruiters in the wealth-management industry stress that firms must align their corporate goals with the goals of their financial advisors to successfully attract recruits.
“Advisors want to run their business as a business for their clients,’’ says Todd Taylor, a global managing partner with Heidrick & Struggles’ financial-services practice. “But if they are at a firm that is using them to achieve the firm’s objectives – such as having to cross-sell the institution’s propriety products – that gets in the way of what the [financial] advisor wants and then you have a culture clash.”
By contrast, firms that build financial advisor-friendly cultures may have less trouble recruiting brokers. “When people are saying positive things about a company in a world where people are inclined to negative things, that is powerful and it spreads like wildfire,” says Glenn Buggy, a managing partner and co-head of the financial-services practice at Caldwell Partners.
It doesn’t hurt, Buggy says, to regularly win plaudits from highly-respected independent sources who seek employee opinions on the matter. For the last two decades, Edward Jones has been named as one of the 100 Best Companies to Work for by Fortune magazine. In 2020, the firm took the No. 7 spot on the prestigious list, the 16th year that firm has ranked in the top 10. And last July, the firm ranked first among “employee advisors” at national brokerage firms in J.D. Power’s 2020 U.S. Financial Advisor Satisfaction Study.
As the AdvisorHub study suggests, a firm can attract the best talent when financial advisors are well compensated and if the technology platform serves the needs of their clients.
“Compensation is always important because a [financial] advisor has to feed and provide for his or her family,” adds Buggy. And with pay, clarity and fairness count for a lot. “I appreciated the transparency of Edward Jones’ compensation plan,” says Barron about her move.
And user-friendly technology is also critical since modern clients demand it and financial advisors need it to ease administrative burdens. In 2020 Edward Jones invested $500 million in virtual business enablement technology to enhance the client experience and enable its financial advisors to lead and grow their practices.
Still, as Jessica Barron’s comments suggest, a firm needs to consider more than compensation and technology if it expects to win converts.
“At Edward Jones, the culture is collaborative and financial advisors help one another learn how to serve clients and successfully grow our practices,” she says.
She also appreciates the flextime that comes from a working culture where she has independence to run her practice as she sees fit. “Family is important to me and I have the flexibility to set my own hours and pick-up my daughter from school,” she says.
Barron also marvels at how easy the transition was from her old firm. “Financial advisors in my region made me feel welcome and provided practical transition support and mentoring. After a few months I became part of the local leadership team. It’s incredible to be invited to be part of the decision-making process.’’
Whether it’s offering flexibility or building a collaborative environment, when it comes to attracting and keeping financial advisors, it’s clear that financial services firms must focus on culture.
In the next article in our series, we explore how firms can build an A-rated culture.