Why planners switch dealer groups – it’s not about the money

Financial planners are likely to remain loyal to their current dealer group arrangements even though about one-third of them feel under-valued as professional advisers, according to new research by brandmanagement.

The results of the survey, of 1,019 advisers, tend to contradict the view which occasionally circulates through the industry that there is an excessive rate of churn by advisers between dealer groups, the researchers say. The survey, entitled The Rules of Attraction, shows that 85.4 per cent of planners say they are loyal to their existing dealer group. However, only 67.7 per cent feel “valued” as an adviser by their dealer group and only 61.8 per cent feel their dealer group is focused on their needs. Slightly more – 70.5 per cent – feel their dealer group assists in developing their business. The study also involved questions designed to ascertain the main reasons financial planners switch dealer groups. The results show it’s not all about the money. The main reason planners will consider changing dealer groups is if they think they are getting substandard “support”, according to the survey results. This is the view of 74.2 per cent of planners. Andrew Inwood, principal of brandmanagement, said that this was primarily about compliance issues, which was the most critical concern for planners. “It used to be technology that they were most worried about and, before that, their main concern was more to do with how they could win more business,” he said. The second-most commonly held reason – by 61.2 per cent of planners – is if there is insufficient product independence. “They don’t have to have complete independence,” Inwood said. “This is more about their perceptions. They need to have the right list (of recommended products) and to be able to select what they want for clients.” Perception often varies from reality. For instance, HillRoss planners regard their product information more highly than AMP planners, even though there is virtually no difference between the two, according to Inwood. There is a similar situation between Axa and Charter planners. Remuneration comes third, with 57.4 per cent, followed by culture (45.3 per cent), brand (38.4 per cent) and client lead referrals (27.3 per cent). “The critical thing is that most planners don’t want to leave their dealer group,” Inwood said. “So things have to deteriorate sufficiently, either in perception or reality, for them to go through the hassles. The barriers to change can be substantial.” Some dealer groups, for instance, require that if a planner leaves the group for another, the firm has to physically change its premises too. “There are people out their making big offers to lure planners to their own groups. So, we look at what things dealer groups have to get right in order to retain their planners.” The study is in its third year.