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Retaining Advisors and Assets During Critical Times

Carla McCabe
May 14, 2020

One of the core areas of focus for every executive at a broker dealer, RIA, custodian, or TAMP is the retention of advisors and assets. Under normal business conditions, challenges abound; add a pandemic to the mix and this focus becomes even more critical as the likelihood of advisor and asset movement increases dramatically.

These relationships are sometimes tricky to begin with. Advisors often report a feeling of disconnect from their providers. And when you think about the logistics behind the relationship – that technically, such groups ultimately answer to a group of shareholders, rather than their advisors – it’s easy to understand why. In fact, these groups really function more like vendors than anything else.

So, how can you make sure that you retain your most valuable advisors during the pandemic and the aftermath that is to follow? It might be helpful to first examine why advisors change firms.

Why Financial Advisors Leave Firms

A recent Fidelity study determined that movement is driven by "a desire for growth opportunities, greater autonomy, and ability to deliver a higher level of client service." Money can also be a motivating factor.

We also believe that technology (rather, the lack thereof), inadequate support in the area of business performance improvement, and a lack of liquidity options are additional reasons why advisors leave.

Advisors Benefit from Expanded Support

Additional support (especially during challenging times) may mean the difference between success and failure for advisors. Remote or unusual working conditions may not always be 100% conducive to top-notch service for the end client. Provide additional, or overflow, resources for advisors to help lessen the burden. Responsibilities may need to shift, and home office staff may need to support advisors in new ways. Ultimately, this will allow your affiliated advisors to shed administrative or operational responsibilities so they can focus on the areas where they excel – including growth (which benefits everyone).

Advisors Value Independence

While operational support is often needed by advisors, one must be careful to balance that support with their need for autonomy. There can sometimes be a fine line between offering the proper amount of support and telling an entrepreneur how they should run their business. Remember that first and foremost, advisors are independent business owners and they sought independence to run their businesses the way they best see fit. Position support as an optional resource intended to help advisors achieve maximum efficiency and you’ll appeal to their entrepreneurial spirit.

Think Outside the Box to Achieve Improved Client Service

Unconventional times call for unconventional solutions. In tandem with expanded support, it may be necessary to make exceptions to your standard “rules”. Just because something has always been done one way, doesn’t mean it can’t change; one size doesn’t always fit all. Be as flexible as possible to help advisors move forward from challenging times and think outside the box as you navigate uncharted waters together. When an advisor can offer better client service, everyone will benefit from increased sales, enhanced public image, and a more effective work force.

Utilize Technology

When it comes to achieving scale, technology is the feature that often makes the difference. And tech solutions that are top-notch can sometimes be the determining factor for whether an advisor stays or goes elsewhere. Technology is only powerful though when you know how to use it to its full capabilities (e.g., many advisors use only 30% of their CRM’s functionality). Make training and resources easily accessible so advisors can take full advantage of the technology suite you provide.

Tech companies (such as Truelytics) that can help advisors understand their businesses and improve them, will also add tremendous value to your network. Remember, advisors are ultimately entrepreneurs – but they often lack the tools to be the best business owners possible. Providing these resources gives you a competitive advantage.

Solve for Common Problems

Analyze benchmark data for your network to identify common deficiencies or challenges across your network – and see if you can solve for them. Is there a common theme or problem you’re hearing that you can help fix? Maybe it’s the lack of a continuity plan or the lack of relationships with the next generation of clients. Providers that proactively go above and beyond – and offer solutions BEFORE advisors ask for help – are going to be better at retaining advisors.

Give Advisors a Voice

In general, people long to feel heard and appreciated. Make sure you provide a “safe” environment where advisors can give feedback, without fear of reprimand. Your advisors are on the front lines, using your offerings on a daily basis – they are often best suited to identify any shortcomings and usually welcome the opportunity to provide ideas for improvement.

Second, make sure you’re properly recognizing and rewarding the effort and hard work that advisors put into making you great. This goes well above just being a top producer. Ultimately, your advisors are the face of your company – ensure that they feel valued for their contributions to your bottom line.

Money Talks, But at a Whisper

While not usually the primary motivating factor, money does occasionally play a role in an advisor’s decision to stay with their current firm. An advisor will remain with a firm they can tolerate if the money is right. But they will jump from great money to good money if the future looks questionable, particularly if another firm with a more reputable reputation approaches them.

Provide Advisors with Liquidity Options

An often-overlooked area of support centers around helping advisors transition their businesses. Firms that offer services to help match advisors for succession (i.e., connecting buyers and sellers) tend to enjoy greater asset retention when those businesses transition. Additionally, firms that are able to solve for continuity upon a death or disability event offer a much-needed resource to solve for a major shortcoming in the industry.

It’s clear that advisors value clarity around the security and value of their business. Advisors will remain loyal if they believe that their current provider offers them the most security now – and in the long term – and delivers the best chance at realizing the highest (or closest to highest) economic value. When you exceed expectations to best support your advisors, they will stay engaged and be more likely to consider you a partner in their success.

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