What You Need to Know
- Wealth management has seen more advisors than ever, especially in the wirehouse segment, becoming receptive to the idea of making a move.
- The tin ear of leadership is the main culprit in advisors' desire to move elsewhere.
- Clear communication and better services are key ways to keep top performers and their clients.
One of the most unusual features of the pandemic economy is that, even in the face of ongoing uncertainty, the number of U.S. workers rushing for the exit has shattered records — and that public reception to this trend has been mostly positive.
The wealth management space has not been immune, with more advisors than ever —especially in the wirehouse segment — becoming receptive to the idea of making a move. What’s driving this shift for advisors, though, remains somewhat misunderstood.
Most workers joining the Great Resignation did so after the rise of remote work showed them the benefits and flexibility of working from home. Many wealth management professionals, on the other hand, are moving out of concern for their clients and their businesses. They learned an important lesson during the pandemic’s earliest days, when equity markets nosedived and clients panicked.
As doom-and-gloom predictions weighed heavily on investors, these advisors were shocked to find that their firms were either unwilling or unable to help them and their clients effectively. In short, they discovered that their firms had confused access to guidance and resources (which is what they needed) with layers of management and bureaucracy (which is what they got).
During this period, the top-down approach of some large firms effectively banished their advisors to a desert island and left them to fend for themselves.
Whether it was problems with moving money during lockdowns, servicing clients from home, or back-office complications, advisors experienced multiple setbacks. The experience invited questions about why, if at all, advisors needed to give up 60 cents on the dollar to their firms if so few of their needs were being met.
These and other initial cracks in their relationships with their firms only widened in the ensuing months. In real terms, wealth management’s Great Resignation resulted from a “Great Mismatch.” The antidote is access, customized to fit the needs of advisors and their clients.
Markets plunged. Advisor access to resources and leadership evaporated.
The record is clear. At a time when access to resources and the ear of senior leadership were paramount to advisor-client relationships, many firms fell short. In worst-case scenarios, advisors were met with indecision and muddied lines of communication from C-suite executives, who often approved a policy of overcommunicating investment advice but severely under-communicated on practical day-to-day matters.
Many advisors felt invisible as nervous clients pounded on their doors and inundated their voicemail with demands that their assets be taken out of the market before it was “too late.”
Since then, a level of stability has returned to the industry, with the S&P 500, Dow, and Nasdaq reaching fresh all-time highs this November and top companies reporting strong earnings.