Familiarity breeds contempt or, at least as far as financial advisers are concerned, familiarity breeds dissatisfaction. The longer an adviser has been authorised by a licensee, the less satisfied the adviser is likely to be with that licensee, across a range of measures.
At first glance this might seem a counter-intuitive result. If an adviser is dissatisfied with a licensee the more likely you might think they’d be to switch to a new one. But it seems that advisers are happy to stick with a relationship that’s leaving them increasingly dissatisfied and then bitch about it in research like CoreData’s 2021 Licensee Research.
There’s a clear and obvious honeymoon period after an adviser joins a licensee. Satisfaction with almost all aspects of what a licensee does is highest in the initial 12-month period. That’s partly the thrill of the new, no doubt; but it’s also surely because no one likes to admit they’ve made a terrible mistake, even if it’s obvious early on.
Satisfaction can get a bit patchy over the next few years, and by the time an adviser has been with the same licensee for five years or more there’s a clear drop-off in satisfaction.
Sometimes the decline in satisfaction is relatively marginal. For example, in their first year of experience most (92.2 per cent) advisers are likely to be satisfied that a licensee is committed to removing substandard advisers from its network. After five years a significant majority (85.8 per cent) of advisers continue to feel the same way. That may reflect actual actions and policies of a licensee being applied consistently and persistently.
But on some measures the drop in satisfaction should be ringing alarm bells. In their first year around eight in 10 (82.4 per cent) advisers think their new licensee is a partner in helping them to grow their business. Five years down the track, the proportion of advisers who still believe their licensee is a partner has halved (41.4 per cent).
Interestingly, satisfaction with a licensee doesn’t seem to be linked to the financial performance of the adviser’s business – the proportion of advisers saying their business has experienced growth in the past 12 months is broadly the same, irrespective of the length of relationship (56.9 per cent for advisers in their first year of their relationship, 58.6 per cent of advisers into or beyond their fifth).
When an adviser first comes on board, a licensee can seemingly do little wrong and it’s unusual for the licensee to be rated less than eight out of 10 by a new adviser for almost everything it does. But as an adviser approaches the fifth anniversary the relationship runs the risk of becoming jaded, and there’s a clear need for licensees to reassert their credentials, re-establish the notion of value in the adviser’s mind, and recommit to the adviser as a valued member of the network.
It’s like any human relationship, really (or so I’ve read). It requires work, regular re-commitment and being attuned to the other party’s needs. It requires an acceptance of change and a willingness to accommodate that.
Most (51.2 per cent) advisers in the 2021 Licensee Research have been with their current licensee for five years or more, but that proportion is in gradual decline. In the 2020 Licensee Research, 54.4 per cent of advisers said they’d been with their current licensee for five years or more, in 209 when the figure was 63.4 per cent and in 2018 it was 57.8 per cent.
It’s worth pointing out, perhaps, that a drop-off in satisfaction isn’t unique to the licensee-adviser relationship. CoreData regularly observes it through customer satisfaction work examining the strength of relationships between advisers and clients as well. Initially a client is over the moon with the transformation wrought for them by their adviser; after a few years of everything going well a degree of “meh” starts to creep in, and it’s often a challenge for an adviser to re-prove their value and worth to a client who’s become used to a level of service, attention and success.
The question of “what have you done for me lately?” should never be far from the mind of an adviser dealing with a client, and it should never be far from the mind of a licensee dealing with an adviser.