Advisor Success Strategies for 2015

by Neil Wernick

First in a Five-Part Series

As advisors reach for a potent Cup of Joe, take a deep breath, and exhale slowly they are revving themselves to jump-start 2015. Coming off an excellent year by all counts, they are wondering, with excitement and trepidation, what problems, opportunities, threats and challenges await them.

Speaking tactically, the day-to-day of being an experienced financial advisor will present its usual flow of circumstances, situations, considerations and reactions.  Strategically, however, the most disciplined and focused advisors will pause today and reflect on that fresh New Year's resolution to become even more organized and identify methodical approaches to leverage the enviable value of their books of business.   The remaining 99.9% of advisors will, right out of the gate, resume the familiar routine of reaction, recoiling, and response, aka business-as-usual.

There is, of course, another way and it is neither difficult nor time consuming.  Rather it is simple and even elegant in its simplicity.  It is thinking and executing strategically with the help of a classic 2x2 matrix of Clients and Assets where each of these dimensions exists in only two states:  current and new.  Each of the four resulting quadrants represents a segment of the advisor's book and names the strategy for addressing the distinguishing needs, priorities and preferences of the clients comprising that segment.


Retention is the set of touch points, programs, and initiatives with the central goal of keeping the client and their current assets. Growth  Acquisition  Succession.

Now is the time to worry about advisor flight-risk

By Neil D. Wernick

It has been, overall, a great year to be a broker-dealer.

Your revenues are likely at an all-time high. You are probably retaining 90% of your advisors and their AUM.  The markets are in high stability.  Your top advisors are enjoying increasing income without your having to increase payout.  All is good, right?

Well, yes and no. 

The impact and momentum of current ripples of market volatility are not reliably predictable today. But the fragility of any nearly six-year-old bull market must be given a voice at the table of boardroom euphoria. It is no longer prudent to assert that tomorrow will be like yesterday or even, today.

The difficulty or ease of your recruiting and retention efforts, as always, hinge first and foremost on advisor (dis)satisfaction.  It is very safe to assert that today, your advisors, especially the majority of your top 10-20% advisors are probably satisfied. 

But for how long?  The markets will likely experience increasing volatility, at least some investors will become unnerved, at least some advisors will look to their broker-dealers for reassurance and at least a few of these advisors will not be satisfied with your response. The best recruiters smell advisor uncertainty from a distance and, as you know from experience, are expert at exploiting any weakness in a BD’s armor.

To be clear, it is not my intention to impart gloom and doom, especially during the holiday season.  On the contrary, I am advocating for proactive BD strategies for solidifying and even strengthening advisor satisfaction, especially in the face of predictable market erosion. While there are many complexities in discussing why top advisors stay or leave, there is little argument that the cost of retaining a top advisor is almost always less than the cost of replacing that individual (and the 80% of their assets likely to follow them out the door). 

Recent research by J.D. Power suggests that nearly one in four independent advisors are indifferent toward their firm or broker-dealer, making them at risk for changing firms. Flight-risk factors are of two complimentary types:  Satisfiers promised and dissatisfiers experienced.  Last year, Fidelity published a study showing that financial considerations, not surprisingly, are the top motivator behind advisors leaving their current BD or being attracted to another broker-dealer. Other flight-risk factors include firm reputation, improved work/life balance, and better investment solutions and client service. An often-cited area of dissatisfaction is marketing support.

Now is not the time for strong financial results to lull broker-dealers into a false sense of self-satisfaction.  By the time a sea change is widely apparent, the momentum for broker-dealer change may be irreversible.  Effective advisor-retention initiatives offer a defensible return on investment and, therefore, broker-dealers are well-advised to continually identify and evaluate alternatives for helping minimize top advisor flight risk. Hopefully your 2015 budget includes increased spending on advisor retention initiatives.  Proactive is preemptive.

Neil Wernick

I am a seasoned, globally-experienced financial industry executive who counsels broker-dealers,  firms and advisors on asset growth and retention strategies and relationship management. You can find me on LinkedIn and @neilwernick. Email neil@rifkinwernick.com.