In today's competitive environment, retaining quality advisors is arguably one of the most critical components to the long-term success of a financial institution investment program. It may also prove to be one of the most challenging aspects of program management.

Cerulli predicts that an average of 8,600 advisors will be leaving the financial services profession each year for the next 13 years, reducing the workforce by 1.7% annually.

And there aren’t enough new advisors coming into the business to make up for this outflow. In other words, banks and credit unions are worried that their best advisors may already be on another firm’s prospect list. And if not, they will be soon.

That said, it is important to understand the lifetime value of a financial advisor. A recent Kehrer Bielan study reports that advisors who stay at a bank or credit union will produce more than $12 million in revenue during the course of a 20-year career.

With these facts in mind, institutions should consider the conditions that make advisors think about making a move, then use this knowledge to preserve relationships with top-producing talent. There are four key areas to consider when it comes to retaining advisors:


Advisors value the bank and credit union space because of the existing infrastructure; however, too many advisors are forced to make assumptions about production expectations, opportunity for referrals and guaranteed salary periods. By clearly defining what success looks like upfront, there are no surprises later. Consider these crucial steps:

• Banks should clearly define yearly production expectations from both the institution’s and advisor’s perspectives since there could be differing opinions on what is acceptable.

• Institutions also should describe the support and referral culture internally so that the advisor knows if they will need to create this culture from scratch, or if it’s already well established within the institution.

• Communicate openly about the short- and long-term compensation design. Banks will want to account for timing variances considering circumstances like transitioning books of business and developing a sales culture within the branches while encouraging the right behavior. Remember, the bank wants the advisor to stay for 20 years, which may take a little investment on the front end.


Management change or change in philosophy can be disruptive to the sales force. This isn’t something to take lightly. The role — and tenure — of a good manager has a significant impact on an advisor’s production, overall happiness, and tenure with a firm.

The reverse is also true. Managers have the ability to set the tone of an investment program as they coach advisors and gain support from bank and credit union executives.

There must be a concerted effort to get to know and understand what financial advisors are experiencing.

One way to accomplish this is to conduct a regular engagement survey to get an accurate gauge on advisor sentiment and to uncover issues. Conducting the survey and taking action on the outcome demonstrates to them that you’re invested in them.


Even minor changes in compensation structure can leave advisors feeling undervalued and can frequently result in advisor attrition.

For example, when firms change the production levels or percentages on their payout grids without providing a potential benefit to advisors, this not only causes frustration and ill will, it also makes advisors feel like they’re being pushed out and may prompt them to look for other opportunities.

It is important to acknowledge the sensitivity around compensation and help advisors adapt and understand long-term benefits. A change that may seem to positively impact the program’s economics or encourage  specific advisor behaviors may be disruptive if not handled properly.


It’s easy to assume that a high-producing or long-tenured advisor wouldn’t consider another offer. But this can be a damaging oversight.

While these advisors may not need the same level of support or attention as a newer or junior advisor, they do want their contributions to be valued and appreciated.

One way to recognize top producers is to include them in key investment program decisions. For example, bring them into the interview and hiring process for new advisors. You can leverage their experience and expertise in the field and make them feel valued at the same time.

In addition, it is imperative to address the inevitable retirement of tenured advisors by putting long-term retention and succession plans
in place.

As these advisors approach retirement age, they will begin to quantify their contributions to the program – and so will your competitors.

You may want to consider phased retirement, junior advisor partnerships and deferred compensation packages as part of your overall top advisor retention and succession planning strategy.

It’s a small investment that will create tenure with the book beyond the advisor’s term. (See our cover story on page 14 to see how some banks are facing this challenge.)

It is more important than ever for banks to retain high quality advisors and limit program disruption.

Not only do these advisors represent an opportunity for short-term revenue contribution within the institution, they also have the potential to add significant value to the overall profitability of an investment program the longer they stay.

If banks spend more time upfront building relationships, setting realistic expectations and establishing goals, they will decrease turnover and lengthen the tenure of its most valuable advisors.

If not, then those top advisors will likely be willing to speak with a recruiter and seek other career

Frank Smith is vice president of business development, institution services at LPL Financial

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