J.D. Power 2025: Succession, Satisfaction, and the Future of Human Advice with Mike Foy

Power study shows growing investor demand for financial advice, even as experienced financial advisors are approaching retirement. How do you see this dynamic shaping the future of advisor workforce?

[00:00:39] Mike Foy: Yeah, that's right. Actually in some investor research that we did earlier this year, we do see support for, really an increasing demand, even among younger investors, in working with a professional advisor.

And so we see potentially growing demand on the investor side for professional advice, right as we see the demographic trends among advisors showing a large number of expected retirements from among experienced advisors, right? So, you do have this, this situation that we see firms in where likely many of their experienced advisors are going to be leaving soon but they obviously want to continue to grow and there's an appetite out there for more human advice. I think the way, what this means for the industry is, a few things, right? One is, firms have to do a better job of attracting new advisors into the industry, and particularly among traditionally underrepresented segments.

And so that would be include women certainly. And that would include just generally advisors under the age of 40, including second career professionals. Bringing more talent into the industry is one piece. But even with that, we don't think that's going to really offset all the retirements.

So it's going to be critically important to accelerate the ways in which they can use technology, in particular AI, to drive greater productivity gains and really enable advisors to be able to more efficiently and effectively service more clients. And then finally, another implication of it, I think, is to ensure that they continue to invest in improving client facing technology and the digital experience in order to allow for greater self-service in some areas so that advisors can really focus in on high value add, meaningful, high impact, interactions with their clients.

[00:02:56] Doug Heikkinen: You mentioned a couple points that I'd like to dig into a little bit more, especially women and younger professionals, which continue to be underrepresented in the advisor community. What insights from your research stand out on why progress remains so slow here?

[00:03:12] Mike Foy: Yeah, so it's interesting, right?

Obviously this is something that's been talked about for a long time, but when we look at the representation of women in the industry, it's been pretty flat, really. So in our study it's about 15% of advisors are women, and even fewer than that, around 10%, are under 40, of either gender, right?

And then when we look at other professions, whether it be law or medicine, the numbers are much, much higher for both younger people and for women. It's clearly a struggle and a challenge. One of the interesting things that we see is that the groups, even though they're underrepresented, the female advisors and the younger advisors that we survey, and this is not just this year, this is what something we've seen sustained over time, actually have higher satisfaction scores with their firm than older and male advisors.

It's really a challenge more of attracting people in rather than changing the experience necessarily for those who are in the industry.

[00:04:27] Doug Heikkinen: Any ideas on what priorities firms should focus on if they want to move the needle in a meaningful way on these underrepresented groups?

[00:04:37] Mike Foy: Yeah, so I think one pretty obvious thing is to, given that, as I mentioned the female and the younger advisors that they have already tend to be fairly highly satisfied, tend to have high net promoter scores, for example, is making sure to really empower them to be evangelists, to be brand ambassadors, to get more involved with business schools and universities.

I think to help maybe continue to shift the reputation that the industry and the profession have, and connect with women and younger people in general as they're thinking about a career path to really consider what being a wealth manager or a financial advisor is really all about.

Because I think a lot of people maybe have, some misconceptions about that Still.

[00:05:33] Doug Heikkinen: You also mentioned technology, and it's never been more central in what people are talking about, but the needs differ across generations of advisors. How should firms think about aligning their tech priorities with both next gen advisors and long tenured professionals?

[00:05:51] Mike Foy: Yeah, so I think looking at, what, one of the things we did in this study was to ask advisors what they feel the priorities of their firm should be in terms of investing in technology going forward. And there was a lot of commonality, certainly a lot of buzz and interest around things like AI as well as some of the core applications like CRM and financial planning tools that are just essential for the day-to-day business.

But there are areas in which younger and less tenured advisors, really, we're looking for more investment in technology, that maybe are less relevant to experienced advisors, right? So certainly things related to lead generation and nurturing, as well as personalized client communications. Those are applications that, again, as we see this generational transfer over the coming years in terms of talent, firms need to really ensure that they're focused on some of those critical tools that are going to be necessary to help new advisors really thrive and build their practice.

[00:07:02] Doug Heikkinen: Your study points to a significant variation in what advisors value in marketing support, with social media standing out as a particular pain point. How important is it for firms to modernize advisor marketing support, and where are they falling short?

[00:07:20] Mike Foy: Yeah, so it's clearly super important and we do see that, as you mentioned, social media was one of the areas we really looked at marketing support in a variety of areas, both online and offline.

And we allow, we asked advisors to rate some of these different areas of support in terms of both its importance to them and their satisfaction levels with the support they're getting from their firm now. And as you mentioned, social media, social media really stood out as an area that was very high priority for less experienced advisors who are still building their business, building their practice.

But it was an area that rated relatively poorly in terms of their satisfaction with the support that they're getting in that area. So that's certainly an area where firms need to focus. Obviously there are a lot of challenges with social media related to the regulatory and compliance implications and, I think that's part of the reason that advisors have been dissatisfied with this because even if they are able to get out and be active in social media, there are a lot of constraints around what they can do there, what kind of information that they can put out. And oftentimes they are, their social media strategy is limited to posting very generic kinds of content that may or may not be relevant to their prospects or clients, and certainly doesn't give them the opportunity to use social media to really build their personal brand, which is what it can do very effectively when executed on.

[00:09:06] Doug Heikkinen: Early career advisors who participate in strong mentoring programs report much higher satisfaction and loyalty.

From your perspective, what makes a mentoring program so effective?

[00:09:19] Mike Foy: So a big part of it is certainly is the matching process. Getting the right mentor and mentee together, who have a kind of a complimentary approach to the business. Kind of connect on a personality level. So that's certainly critically important is that matching process. And, the program really, I think in order to be effective, needs to focus a lot on both relationship skills in addition to just developing more technical skills that are necessary for the profession.

And then a lot of the other things that we see as being differentiators or making for a successful program are things that are, I think, critical to even a typical boss/employee relationship, right? So ensuring that there's regular formal communication, that there are clear objectives that are set and regular check-ins. And, so those kinds of things, when they are consistently executed on over time, really make those relationships effective and help reduce attrition rates and help accelerate the productivity growth that happens for advisors earlier in the career.

[00:10:39] Doug Heikkinen: Team-based advisors seem to have a higher satisfaction by spending more time with clients and less on administrative tasks. What does this suggest about the value of team structures compared to solo practices?

[00:10:54] Mike Foy: So we certainly, we do see differences there, both in terms of their satisfaction with the firm and also, to your point, in terms of their ability to allocate more time to their clients and to business development. I think that the team-based model is obviously not something that's new, but we're seeing more and more firms, even those who have traditionally not been team oriented, really starting to move in that direction, for a lot of reasons, right? So I think certainly, it is a win in terms of helping new advisors succeed in the industry by pairing them not just in a mentor relationship, but even in a team with more experienced advisors. It helps from a succession planning standpoint, for when some of the more experienced advisors move into retirement.

They have a more junior partner that can provide continuity for those client relationships. It provides a better ability to support clients, particularly clients with intergenerational families. And certainly we see that it lowers attrition rates. So if you have a team that's operating within a firm, it makes it more difficult and less likely that those teams are going to move to another firm. So there's all sorts of advantages, I think, for both the advisors, the firms, and the clients. So it certainly feels like the team model, and it may not be for everyone, but it's certainly a winning model. And I think firms are going to continue to move in that direction and really in the future, that's going to be the default, the default model for advisors.

[00:12:39] Doug Heikkinen: It wouldn't be a interview or a podcast without talking about ai. So here we go. The study highlights the effective use of AI tools can help manage stress and loyalty risks with large client books. Where do you see the biggest opportunities for AI to practically improve the advisor experience today?

[00:13:00] Mike Foy: So AI has obviously many applications across the industry and specifically for advisors. Firms are already doing things with AI. Some of the things that we're already seeing have results are basic operational issues like enabling an automated summary of a meeting or call, communicating follow up steps in a more automated way that, again, do help free up advisor time and improve productivity.

One of the areas where there's a lot of excitement, I think, in the industry, and this is something that's been going on at some firms for a couple years. Others are more, are earlier in the process. But most of the firms that we work with are, one of the big use cases for AI related to advisors is what you might call a next best action type of capability, right?

Where these technology tools are looking across the institution's clients and identifying patterns in terms of things like client receptivity to certain products and services and being able to really help advisors to prioritize and make suggestions in terms of very targeted, relevant outreach.

So if other clients that look like Doug have been receptive to these products and services, I, maybe I should be talking to Doug the next time, we have a conversation about that. And so again, That's certainly an area that we're seeing a lot of investment. It's really the things that I think are intended to, going back to the earlier point, address that issue of how can we empower advisors to more efficiently and effectively serve their clients?

[00:14:58] Doug Heikkinen: Succession planning continues to be both a challenge and a loyalty driver. What traits separate firms with robust succession strategies from those that risk losing advisors.

[00:15:11] Mike Foy: So one of the things we see that differentiate them is really the degree to which they have invested in teaming, FA teaming, right?

In our study, only about a third in, when we look at the employee channel of advisors, only about a third of sole practitioners said they had a formal succession plan in place, versus more than two thirds of advisors who are team-based. So a part of it is really just driving more, participation in teams.

They're going to be much more likely to do things like develop business continuity and succession plan. And advisors, really I think, in order to embrace succession planning, need to not only be motivated by the desire to monetize the practice that they have, in many cases, built over decades, but also they're concerned about the continuity of the experience and the care of their clients, right?

And so I think the team-based context really addresses that issue much more effectively than a formal succession plan would.

[00:16:27] Doug Heikkinen: All right, last one for you. If you could leave firm leaders listening today with one key takeaway from this year's study about building advisor satisfaction and loyalty, what would that be?

[00:16:40] Mike Foy: So I think the big takeaway is that, we see very strong evidence that technology is not going to replace human advice. Whether it's, despite the emergence of things like digital or robo advice, despite the pervasiveness of very intuitive free trading platforms like Robinhood and others, we still see a very robust demand and a strong future for human advice.

But technology is absolutely going to continue to accelerate in the way that it transforms how advisors manage their practice and how they are able to serve their clients effectively. The firms that are able to really prioritize those most critical areas to invest in technologies that can empower their advisors are going to be the ones that continue to grow and succeed moving forward.

[00:17:42] Doug Heikkinen: Mike, J.D. Power always does such a great job with these things, so thank you so much for being with us. Fantastic information.

[00:17:50] Mike Foy: Thanks, Doug.

[00:17:52] Doug Heikkinen: We will put a link to the survey in our notes, and feel free to visit J.D. Power directly at jdpower.com. We are on all social media platforms @Advisorpedia. Please give us a follow. For our producer Tory Miller, and everyone at Advisorpedia, thank you so much for listening.