The Importance of Advisor Tenure
According to our proprietary database of 2,634 advisors in 151 banks and credit unions, financial institution-based advisors have been with their current firm for only 5.6 years. That is substantially less than the tenure of advisors in non-bank firms – 38% fewer years than advisors in national and regional firms, half the average tenure of wirehouse independent advisors.
Sources: Kehrer proprietary data and Financial Planning Association.
This gap in tenure directly impacts advisor productivity, for tenure is one of the most important drivers of advisor production—the longer the tenure, the more an advisor produces.
Part of the differences in average tenure are due to differences in the age of advisors in different segments of the business—financial institution-based advisors are about two years younger, on average. But the biggest source of the tenure gap is the higher advisor attrition rate in banks and credit unions.
The implication for financial institutions is clear—they have to do better at retaining advisors. We estimate that the cost of an unwanted advisor attrition is $2 million in lost revenue, for advisors of any tenure, even if they do not take clients or their assets with them. See Closing the Bank Door: Driving Growth by Stemming Advisor Attrition.