Discover How Satisfied and Engaged Financial Advisors Will Boost Your Firm’s Bottom Line

Numerous studies show that an engaged workforce translates to a higher bottom line. This is no different for financial advisors — sales performance management is more than compensation. Employee engagement research by Gallup shows that engagement is highly related to positive business outcomes. Gallup’s research also shows that compared to teams of disengaged workers, engaged teams experience:

  • 24% to 59% less turnover
  • 10% higher customer ratings
  • 21% greater profitability
  • 17% higher productivity

The American Psychological Association estimates that the U.S. economy suffers to the tune of $500 billion due to workplace stress, which results in over 550 million sick days each year.

While these statistics span a variety of industries and types of employees, the message is clear: satisfied, and engaged employees translate to a better bottom-line, this is true for a manufacturer as well as a broker-dealer. 

1. Increase Client Satisfaction

According Gallup companies with high employee engagement experience 10% higher customer ratings.

Engaged employees buy into the organization’s mission, tend to go above and beyond, and this will carry over to their interactions with clients.

Client satisfaction should be an organization’s top goal. However, simply telling your team of advisors that the client comes first isn’t going to improve client satisfaction. Employees who don’t feel engaged with the firm’s mission aren’t as likely to go that extra mile for your clients.

Clients can sense the difference between advisors and other employees who are doing the basics of their jobs versus those who are engaged and who genuinely care about their satisfaction. Clients who don’t feel valued or satisfied may look elsewhere for financial advice.

Losing a client has consequences to the bottom line. In addition to lost revenue, there are also costs to acquire new clients including marketing expenses. There is also the intangible loss of potential referrals from that client to friends, colleagues, and family members. In short, unengaged team members lead to reduced client satisfaction, which can have a very tangible impact on the organization’s bottom line. Advisor job satisfaction contributes to increased client satisfaction. 

2. Boost Productivity

Tools to increase productivity can be a means to increase advisor job satisfaction AND your bottom line.

Industry thought leader Michael Kitces has broken down how a typical advisor spends their time. He concludes that only about 20% of an advisor’s time is spent on actual client-facing activities. The rest of their time is spent on activities like marketing and business development, professional development, team management, and administrative tasks.

Ways to help advisors might include adding support staff such as paraplanners along with improving technology to automate administrative tasks. Such enhancements will allow advisors to focus on meeting with clients who will benefit the client and the organization as a whole.

Clients who feel like they are receiving excellent service and advice will be more likely to bring assets to your firm, again increasing the bottom line. Your branch’s focus should be on doing things that make your advisor’s work more productive. 

3. Retain Top Talent

According to a recent study from Kehrer Bielan Research & Consulting, losing a tenured advisor typically costs a firm at least $2 million in revenue. This does not include additional potential lost revenue in situations where the departing advisor brings their business with them to a new firm. Additionally, this lost revenue may never be recovered as replacement advisors usually produce less than their predecessors in the first couple of years.

Their research creates a compelling argument in favor of brokerage firms and branch offices spending the money and making an effort to create an environment that encourages advisor retention, which will reduce costs in recruiting experienced replacements from the outside. Top-quality advisors expect to be compensated in order to make a move from their current firm.

In a 2017 financial advisor study by J.D. Power, research showed that top performers, advisors with more than $1 million in annual production, are the least satisfied employees. Only 27% of these top-performing advisors strongly agreed that communication from their firm’s leadership was timely and useful. Only 35% strongly agreed that management was leading their firm in the right direction. These numbers should be unsettling to all branch managers. According to Mike Foy, director of the wealth management practice at J.D. Power:

“Firms need to continue to raise their game to keep these high-producing advisors happy and productive, both to retain client assets and revenue in the short term, and also as a key part of a longer-term strategy to mentor and team with the next generation of advisors.”

Engaged and Satisfied Teams are Vital

Revisiting the Gallup research cited in the introduction, their research indicates that companies with engaged employee teams show a 21% increase in profitability when compared with disengaged employee teams. When reflecting on your own career experiences, we’re sure that you can relate to this.

Highly engaged advisors will focus on the firm’s mission versus considering moving to a new brokerage. Employee engagement can also be vital in helping average performers achieve more.

Sit down with your entire team, but especially your top advisors and ask them how you can better support their efforts. Making an effort to ask and listen can go a long way towards building trust in your leadership and foster a culture of satisfied, engaged employees. In turn, these employees are more likely to take the extra steps needed to drive the firm’s bottom line higher.

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