It doesn’t really matter where you work, or how much you love your job, sometimes it’s tempting to think about what it might be like to work somewhere else. The grass may appear greener, but often we get our ideas of what other workplaces are like by talking to people who already work there.

Unless you’re the kind of person other people try to avoid at parties, when someone asks you how work’s going you’ll answer that it’s going just fine. No one wants to admit that it is stressful, that things don’t work and that one of our co-workers in particular is an idiot, the business lacks direction and clients are angry. And no one really wants you to tell them those things either – when they ask, they’re just being polite.

But it’s different when someone can answer questions anonymously, and without potential social embarrassment.

CoreData asked advisers earlier this year what it’s like being authorised by their current licensee. On a range of different criteria, ranging from support on acquisitions and succession to product independence and choice, they painted a picture of the things they think their licensee does well, and the things they think their licensee really could improve upon. This forms the basis of CoreData’s annual Licensee Research.

And then we asked them a different question: what would another licensee have to do – and do really well – to make you think about switching? You can see the results in Table 1.

The table shows how each of 13 potential switching triggers scored in 2017, 2018 and 2019. The trigger score is simply the percentage of advisers who answered “yes” to the question “Which of the following factors, if delivered exceptionally, would make you consider switching to another licensee?”

The table also shows the three-year average ranking of each of those triggers. The table shows the factors ranked according to their respective three-year averages to reflect their relative persistence as factors that might trigger advisers to switch licensees.

Switching not a quick choice

Advisers generally do not take the decision to switch licensees lightly – even if it goes well it is time-consuming, costly and disruptive. The table tells us that over the past three years, adviser technology has been the major factor which, if delivered exceptionally, would most likely make an adviser switch licensees. This is followed by the quality of compliance support, and product independence and choice.

Last on the list is the licensee’s brand. CoreData’s research has previously shown that a small licensee’s brand is of limited help to advisers – almost half of people who have an adviser cannot name the adviser’s licensee. And the brands of the large institutional licensees have turned toxic over the past 12 months.

The table is a check-list for the things licensees must do really, really well if they want to be in with a shot of attracting new advisers. If we take a closer look at the number one switching trigger and look at how satisfied advisers say they are with their current licensee on this issue, we find that it has a current satisfaction rating of 47.0 per cent, and a three-year average satisfaction rating of 53.1 per cent. Satisfaction with adviser technology is currently below its three-year average, and fell almost 10 percentage points in just 12 months.

(The satisfaction score is the percentage of advisers who ranked satisfaction as a seven or higher on a scale from zero to 10, where zero means completely dissatisfied and 10 means completely satisfied).

Licensees have got to get it together

This reinforces why licensees have to get their act together on adviser tech – satisfaction with existing licensee support has declined, and it’s the number one factor that would trigger an adviser to switch. The story is repeated for compliance support: current satisfaction rating is 49 per cent; the three-year average is 61.4 per cent; and it’s fallen almost 20 percentage points in 12 months.

So while we have a handy checklist of factors licensees need to do well if they want to attract new advisers, licensees can be slightly more sanguine about other factors that have declining or low satisfaction, but which advisers themselves clearly care about less.

For example, satisfaction with licensee brands is 45.3 per cent across the industry this year (significantly less, at 31.2 per cent, for institutionally branded licensees), down from 70.2 per cent last year, but advisers don’t care – it’s just not an issue that would make them think about switching. And satisfaction with business planning is at 34.1 per cent this year, below its 46.5 per cent three-year average, and down 16.8 percentage points on last year. But again, it’s unlikely to make advisers consider switching.

It’s worth thinking about what a licensee might look like if it excelled on adviser technology, compliance support and product independence.

Perhaps unsurprisingly, the licensee that was named Licensee of the Year for 2019 – Matrix Planning Solutions – has a focus on these three issues. In a recent interview with CoreData, Matrix boss Todd Kardash suggested that excelling at compliance support would be a major factor in licensee success, and poor quality of adviser technology would prove to be a licensee’s Achilles heel.

Simon Hoyle is head of market insight for CoreData Research.
Leave a comment