Changes in compensation packages at the major financial advisory firms and a lack of confidence in firm leadership has led to an undercurrent of dissatisfaction among employee advisors, according to J.D. Power's 2015 U.S. Financial Advisor Satisfaction Study. In fact, since 2014 there has been a 20-point decline in advisor’s satisfaction level at their place of work. There has also been a slight decrease in the percent of advisors who say that they feel a sense of loyalty to their firm and plan on staying there for the next couple of years. Contrarily, advisors who work for themselves are markedly happier.

Measuring Advisor Satisfaction

The J.D. Power study came up with its results by measuring the satisfaction level of both advisors who are employed by their investment services firm and those who work independently, but are affiliated with a broker-dealer. The study based its results on the responses from more than 3,300 financial advisors, conducted between January and April 2015. J.D. Power found that advisor satisfaction was mostly driven by advisor/professional support; client/customer-facing support; compensation; firm leadership; operational support; problem resolution; and technology support. The study measured advisors level of satisfaction on a 1,000-point scale, and found that the overall satisfaction level among employee advisors was 701, marking a 20-point decline from 2014. (For more, see: The 15 Fastest-Growing RIAs.)

Company Culture

For those advisors who felt a certain loyalty to their firm, some 38% stated that the primary reason for their satisfaction was either their contract requirements or their compensation levels. About 43% of respondents stated that their primary reasons for remaining loyal to their firm came from their level of satisfaction with their firm’s leadership, culture, client focus or independence.

Advisors who work independently had a slightly higher satisfaction level with their job than those working for a more established firm. Their rating for job satisfaction rating was 773 out of 1,000, some 72 points higher than in the employee segment. These advisors said that they enjoy working independently, with 89% of respondents noting that they “probably will” or “definitely will” remain independent. (For more, see: Keys to Going Independent for RIAs.)

Where the Happiest Advisors Work

Edward Jones Investments ranked the highest, for a sixth consecutive year, in terms of employee satisfaction, in the employee advisor segment of the J.D. Power study. The firm pulled in a score of 925 out of 1,000. Next was Raymond James Financial, which ranked 885 on advisor satisfaction level. Charles Schwab, with a score of 785, came in third. The next best firm to work at, according to the ranking was Wells Fargo Advisors, which garnered a score of 706, followed by UBS Financial Services with a score of 683. Merrill Lynch Wealth Management scored 645 followed by Morgan Stanley Wealth Management with a score of 611. The average score was 701.

Satisfaction and Loyalty

The key driver in the decline of advisor satisfaction and loyalty, not surprisingly, turned out to be compensation. Satisfaction with compensation among employee advisors has decreased, according to the study, with 50% of respondents indicating negative changes to their payout during the past year, up from 41% in 2014. Only 9% of advisors indicated that their compensation plans have improved. A whopping 86% of advisors who responded to the study said that it’s their belief that compensation plans are more aligned with their company’s corporate goals than with rewarding advisors who do their job in an appropriate manner. For example, many advisors say that they have felt a pressure coming from above to sell products and services that may not be best for their clients, but will bring in more commissions. (For more, see: These Firms Are Tops Among Financial Advisor Clients.)

Compensation satisfaction looked a little rosier for advisors who work independently. Seventy-two percent said that their compensation levels have not changed since last year, and 11% said it had actually improved. More than eight in ten independent advisors also indicated that they believed their appropriate behavior was being rewarded in better compensation.

Leadership Matters

Firm leadership also seemed to play a critical role in cultivating happy and loyal advisors, according to the study. As it turns out, many advisors found the leadership at their firms to be lacking. Some 42% of employee advisors said they believed that the leadership at their firm failed to create a strong culture of accountability. Fifty-percent of respondents indicated that their immediate supervisor often failed to keep promises and commitments. Many also noted that there was a lack of effective top-down communication at the firm and that leadership did not clearly communicate the company’s strategic goals. (For more, see: Company Size Matters: Job Search for Financial Advisors.)

The Bottom Line

Employee advisors are happiest when they believe their firm rewards those advisors who act appropriately through better compensation and when leadership follows through on its commitments to its advisors and keeps the lines of communication open. (For more, see: Advisors: Avoid These Common Mistakes.)