Advisers Toughing Out Troubled Times

The times may be troubled, the markets volatile, but advisers seem resilient.
Indeed, the 4th Annual National Financial Broker and Advisor Sentiment Index finds that, despite the market and economic upheaval, brokers managed to remain generally satisfied with their careers, as indicated by this year’s Index of 6.9 (on a scale of zero to 10), though that is down from 7.3 a year ago.
Broker satisfaction at independent broker/dealers and wirehouses declined in 2008, as did satisfaction for registered investment advisers (RIAs). However, satisfaction went up for brokers who work in banks. The Index is a study that analyzes broker and advisor job satisfaction based on responses from a random sample of 1,200 U.S. brokers and advisers from independent, wirehouse, insurance, regional, bank, and RIA firms.
Looking at the specific drivers of broker satisfaction, compensation was the most important, nearly doubling in importance from last year. Brokers were, however, feeling less satisfied with several key measures of compensation, such as:
  • whether their compensation plan was flexible and competitive (down 12 points),
  • the level of payout ratios (down 14 points), and
  • quality of benefits packages (down 10 points).
Job Changers


The current market uncertainty seems to be having little impact on job changers; 9% of all brokers surveyed said they were likely to switch firms in the next 12 months, consistent with switching trends seen in 2007. The top three reasons for brokers considering an exit from their current firm are:

  • “better pay,”
  • “more independence or freedom,” and
  • “better career opportunity.”
Moreover, two-thirds (65%) of brokers who say they are likely to switch firms in the next year would prefer to move to another type of firm, up slightly from 62% in 2007, with the RIA channel seeing the greatest growth potential – 30% – which is more than double last year’s findings.
Among those brokers who actually did switch firms in the last three years, the No. 1 reason for switching was “better career opportunity,” followed by “more independence or freedom” and “unhappy with changes in their firm’s direction.”
“Paperwork” and “finding new clients to grow” are cited as the main challenges encountered for those who switched firms. Among those brokers who did switch firms, just 21% established or joined a new firm, while 79% moved to an existing firm. Of those who established or joined a new firm:
  • 25% – joined an RIA firm,
  • 42% – joined an independent broker/dealer and
  • the rest joined another model.
According to the National Financial study, about one-third (35%) of brokers were able to transfer more than 90% of client assets over when they switched firms. Those who moved fewer assets primarily cited a preference not to do so or prior employer agreements.
Looking ahead, nine in 10 believe the market (as measured by the S&P 500) will be flat to positive in 2009, with three-quarters seeing the market increasing by an average of 15%.
The National Financial Broker and Advisor Sentiment Index is an analytical measurement of U.S. brokers’ and advisors’ satisfaction with their profession and their current broker/dealer. It combines satisfaction with the levels of support brokers and advisors feel they get from their firm in various areas, along with brokers and advisors’ satisfaction with their work-life balance in terms of having the time and ability to accomplish their personal, financial, relationship, and work goals. Data for the Index comes from a National Financial study of more than 1,200 U.S. investment professionals.
The National Financial study was conducted by online interviews between October 3 and November 7, 2008, by Sancore LLC. The respondents came from a mix of independent, wirehouse, insurance, regional, bank, and RIA firms, weighted to accurately reflect the industry composition.