Adviser Turnover By Licensee Owners
The turnover of staff is often regarded as an important measure of a business. The measure provides insight to the business effectiveness of recruiting and maintaining the right staff. High turnover rates also carry a high cost burden, as replacing staff comes with additional costs and efficiency issues.
Calculating Staff Turnover?
The actual measure is based on staff resignations as a percentage of the average number of staff over a given period. For example, if you started with 200 staff and now have 196, your average staff holding would be 198 as (200 +196)/2. If the business lost 20 staff over this period, the percentage turnover is 10.1% as (20/198)*100
What Can Impact Staff Turnover
Each industry and profession will have its own issues to deal with and the financial advice sector has had more than it’s fair share over recent times. However, each participant in financial advice have known what the issues are and put in place plans to minimise their losses. Therefore, a comparison across leading participants makes for interesting reading.
Turnover rate can be affected by a business strategy. For example, if a business in financial planning decides to no longer provide services to ‘single adviser’ practices, that business may expect some additional losses. However, that company may have predicted that as a result of the change, they could attract large practices and increase the number of advisers.
We have businesses, such as the banks, giving up on advice and the losses are in effect redundancies. Such losses are also opportunities for other businesses to pounce upon.
This past year has been dominated by the FASEA Exam and heavy losses were always expected, which in turn means a high turnover rate. As mentioned, every business knew that this was coming up, so it is interesting to see which business were able to best manage the FASEA issue.
The chart below highlights the turnover of advisers over a 12 month period, May 12, 2021 to May 11, 2022. We have only included five largest licensee owners. As shown in the video, our Members can mix and match comparisons very easily.
Note: We have completed this at the licensee owner level as opposed to individual licensees. A number of licensee owners have been busy buying licensees and transferring advisers from one to another. By measuring the movement at the licensee owner level, we remove much of the ‘noise’ created by internal transfers.
The effect of turnover rate is a combination of appointments and resignations. The chart below highlights the percentage of actual appointments and resignations of advisers, as measured against the starting number of advisers for the time period.
Note: *Average Appointments as a % of the Starting num of Advisers is 9% and Resignations at 26%. *The Average is the ‘Average’ of the results
In the video, we highlight different turnover rates for different sized licensee owners and for those operating in different business models. We also show how easy it is to compare different ratios across different dates.
The averages as a percentage of Appointments versus Resignations (see video), really does highlight how tough the year was, very much a case of one step forward and two steps backwards.
For more information on staff turnover rates and why they are important, a ‘Google’ search will quickly highlight the issues concerned.