AdvisorHub Culture Study: Is Culture More Important to Firms or Financial Advisors?
Financial advisors weigh in on whether their firm values a variety of culture factors as much as they do.
In the AdvisorHub Culture Survey, sponsored by Edward Jones, more than 500 financial advisors were asked to rank a variety of cultural attributes that are of particular importance to them. Not surprisingly, financial advisors consider factors such as their firm’s reputation, compensation practices and the ability to serve their clients of great importance.
But the study took matters a step further: it asked the financial advisors whether these and other factors also matter to the different types of brokerage firms they work for. The results show that financial advisors across the industry feel their firm often share their values; that is particularly the case for cultural attributes such as preserving a firm’s reputation and integrity.
The financial advisors also felt that the firms cared about the ability to serve clients needs regardless of the firm’s proprietary products, improving the client experience, and providing back-office support.
But the financial advisors gave the industry overall lower marks when it came to caring about consistent and transparent compensation, serving client needs regardless of a firm’s proprietary products, allowing for flex time and creating a collegial as opposed to competitive work environment.
Financial advisors across the industry recognized putting clients’ needs first was core to building a strong culture. “Every firm says they put clients first,” says Tammy McKennon, who has been a financial advisor at Edward Jones since 2009. But her past experience aligns with these survey findings that showed clients’ needs to be less important to wirehouse advisors.” In the past I worked for a wirehouse where I had to answer to outside shareholders, something we don’t have at Edward Jones.’’
The study also broke down the respondents by gender, ethnicity and even age. And some of the results should be heartening to executives at firms who are seeking to create cultures that are inclusive of women and minorities.
Both women and men in the survey reflected on the importance of flexibility in personal schedule and autonomy to run a practice, though interestingly, these were areas of significant gaps between what was most important to financial advisors personally and what they thought was important to their firms.
The minority financial advisors also were as likely as their non-minority peers to think that their companies cared about many other attributes of a strong company culture, such as the allowing for flex time and the autonomy to run a practice.
Regardless of background, it’s clear that financial advisors value flexibility and autonomy in this environment. Some firms may be more well-suited than others to deliver on these attributes.
“The branch model structure gives Edward Jones financial advisors the freedom and flexibility to build individual practices tailored to the unique needs of their clients, their markets and their personal priorities,” says Patty Carter, a Principal in Branch Team Strategy with Edward Jones.
Regarding compensation, the survey findings revealed financial advisors, not surprisingly, expect consistency and transparency, but say their firms value that far less, creating a significant gap in importance.
It’s a positive for the industry that financial advisors who self-identified as minorities perceived that the firms cared about consistent and transparent compensation even more than those financial advisors who identified themselves as white.
The results of the survey suggest that the age of a financial advisor isn’t that big a factor in determining whether they perceive that their firm values culture as much as they do, with a few exceptions. For example, on the issue of creating “consistent and transparent compensation,” financial advisors between the ages of 45 and 64 thought that the industry cared about this attribute more than those who were younger than 45 and older than 65.
“Compensation at Edward Jones is designed to be transparent. Financial advisors can own our success and the ‘no ceiling’ compensation approach is why some come – and stay,” says Jesse Abercrombie, an Edward Jones financial advisor and general partner who has been with the firm since 2003.
When it comes to compensation, the study revealed that financial advisors view different types of firms in very different ways. On the question of whether firms were perceived as caring about “consistent and transparent compensation,” the midsized and smaller firms outscored the wirehouses. More broadly, financial advisors felt that independents and national and regional broker dealers cared more about a variety of cultural attributes than the wirehouses.
Tony Sirianni, the CEO and publisher of AdvisorHub, is hardly surprised that financial advisors drew distinctions between the types of advisory firms when it comes to creating an appealing work culture. “I would say that the large regional firms and smaller firms are more attuned to cultural attributes,” he says. “While they offer more tailored products, they invest in service and culture and for their advisors, that’s a worthwhile trade-off.” In fact, many of these financial advisors are all happy to be free from selling a firm’s proprietary products, he adds.
Sirianni says that the industry, including the wirehouses, can take steps to show that they care about culture as much as their advisors do. In fact, their businesses may depend on it. “The recent moves of advisors from large firms towards regionals and independents and the fact that Edward Jones has overtaken bigger firms with the size of their brokerage network shows that advisors are voting with their feet and choosing culture.”
Meanwhile, at Edward Jones, the firm has a long tradition of seeking to take a wide swath of cultural attributes as seriously as its financial advisors do. “This place is built on client relationships and financial advisors have the freedom to recommend solutions based on client needs,” says Carter. “Our success is shared and that keeps our culture strong.”
Abercrombie agrees that the firm’s partnership structure in critical to building a culture in which financial advisors feel valued.
“Our culture means that as a financial advisor, I have the freedom and autonomy to build my own practice, but I also receive support to help me realize my potential,” says Abercrombie. “I lead my practice, but there is always a team that has my back.”
In the next article in our series, we explore how financial advisors feel about the impact culture can make on a positive client experience.