Wealth firms risk billions as advisor attrition rises – is AI the solution?
Wealth management firms risk losing billions through advisor attrition and yet most firms are not doing enough to prevent it, according to Juan Cruz Garzón, COO and co-founder of Fligoo.
Advisor attrition rates rose by 7.5% in 2023, resulting in 9,600 advisors switching firms. This also amounted to over $100bn in AUM being transferred within 90 days. While job changes are a natural part of the market cycle, they have costlier side effects than merely finding a replacement advisor. Garzón explained, “Advisor attrition poses a major risk to wealth management firms, primarily because it can lead to substantial financial losses and destabilize client relationships.”
Wealth firms may implement measures like garden leave to discourage advisors from taking clients when they switch jobs, but these efforts are not always successful. The Federal Trade Commission’s recent ban on non-compete agreements will allow even more advisors to bring clients with them as they depart a firm.
Additionally, some wealth firms offer substantial retention bonuses to retain advisors. A recent example of this is Richardson Wealth, a Canadian firm that has committed to pay up to $15.2m in retention bonuses for advisors that have been with the firm since 2020 and stay until at least November 2026.
Unfortunately, firms cannot prevent everyone leaving and when an advisor leaves, they can take a significant portion of a firm’s AUM with them. Garzón added, “This is especially damaging because a single advisor’s book of business can represent millions in AUM.”
Even when clients remain with a firm, their trust and satisfaction can be significantly affected by a manager’s departure. Garzón said, “Clients are often loyal to their advisor first and the firm second. Replacing a departed advisor is costly, too. Recruiting and training a replacement can easily cost 300-400% of the advisor’s annual production, not to mention the challenge of reestablishing rapport with clients.” Furthermore, if multiple advisors leave a firm in a short period, it could create the impression of an ‘advisor exodus,’ damaging brand trust.
Fligoo, a provider of enterprise AI solutions, recently launched a new whitepaper exploring the trends driving advisor movement, the failings of traditional retention strategies, how AI can help address the problem, and guidance on how to improve retention.
Causes of attrition
There are several factors that could cause an advisor to leave a firm. A merger and acquisition, for instance, can create a surge in attrition as uncertainty around their future and changes in the workplace often cause people to look for other opportunities. Other drivers include compensation, culture, technology, ease of doing business and autonomy.
According to Garzón, one of the biggest contributors to advisor attrition can be a lack of support from the firm. More clients are demanding personalised advice that is powered by technology, putting greater pressure on advisors to offer these services. Simultaneously, advisors are increasingly recognizing the value of technology. A modern WealthTech platform enables advisors to spend less time on labour-intensive data management and more on value-added services. As a result, advisors are willing to switch to a firm that offers them a more modern system.
Similarly, independent advisory firms and registered investment advisors are becoming more popular and can provide advisors greater autonomy and flexible compensation structures. These firms give advisors a greater sense of freedom and more control over the client relationship.
Ultimately, advisors have more freedom to move and are willing to leave a firm in search of one that offers them a better opportunity. In this environment, the ability to predict attrition is vital.
Garzón said, “Knowing which advisors are likely to leave is crucial because it gives firms a chance to fix the problem before it happens. Think of it like a warning system—if you know someone is at risk, you can step in with a customized solution, whether it’s better compensation, more resources, or even just giving them more support in their day-to-day tasks. Being proactive on this helps keep firms stable, helps them hold on to client relationships, and protects the firm’s AUM from being transferred out.
“Understanding advisor attrition risk also helps with strategic planning. Firms can better align their recruitment and retention efforts and even get a sense of which areas of the business might need more attention. The ultimate goal is to maintain a steady ship, and you can’t do that if you’re always reacting instead of anticipating.”
How to prevent attrition
It might seem that a firm would be unable to predict if an advisor is about to resign, but there are multiple warning signs that can give an indication of an intent to leave long before a resignation is handed over.
These signs can include a change in trading activity, a variation in managed accounts and their tenure. However, monitoring these variables is time consuming and requires firms to spend time assessing the output of advisors. This is where Fligoo’s AI solution can help.
Garzón said, “Our AI picks up on subtle, less obvious indicators that an advisor might be considering a change. For instance, signs like a reduction in proactive client outreach or fewer referrals suggest engagement may be dropping. We’ve also found that a decline in cross-selling efforts or a modification in the frequency of transactions can indicate an advisor is pulling back. Even less obvious changes in median or rolling values of very specific aspects of clients’ portfolios can be telling.”
Fligoo’s AI solution tracks and analyzes advisor risk over time, giving both an individual and population-level insight. Each advisor is given a risk score, which consistently updates based on the hundreds of client and advisor variables that are analyzed by the AI, giving managers a dynamic view of where risks are rising or falling.
It then provides the firm with the reasoning behind the score, its relation to other advisors in the team, and recommendations on boosting retention. “This lets firms act in real time to address both individual and systemic risks, and to create targeted, data-driven approaches to retention,” Garzón explained. Another boon of the AI is it empowers firms to identify advisors with undeveloped growth opportunities in their book of businesses, helping them focus on retention and the development of staff.
What makes Fligoo’s AI impressive is that it can predict advisor attrition with 90% accuracy. This is due to the AI’s monitoring of a wide range of signals, including clients closing accounts, significant asset transfers, and gradual changes in AUM, to build a wider picture to the disengagement of an advisor. This becomes a powerful tool, as firms can easily spot those at high risk and intervene proactively with tailored support, resources, or compensation adjustments. In fact, Garzón pointed to one use case where its AI helped a firm identify $83bn in AUM at risk due to potential advisor departures.
Garzón noted that this is one of the first AI-powered solution aimed at retention in the wealth management space. The reason is simply because the data involved in predicting attrition is complex. “It’s not just about knowing who is leaving but understanding the thousands of little signals that lead up to that decision—trading activity, account management trends, personal advisor behavior, and more. Building a tool that can process all of that data and actually make sense of it is tough, and it’s something most firms haven’t mastered yet.”
Another contributing factor is that it requires deep industry knowledge. Advisor attrition is not the same as general employee turnover and it doesn’t carry the same level of risk. Consequently, AI has only recently advanced enough to understand the nuances of human behavior and the financial services landscape, enabling accurate predictions
How to retain staff
There is no simple answer when it comes to retention. Each firm will have their own methods, and each advisor will have their own reason for leaving that might not be simple to solve. This is why Garzón urges firms to have an adaptable and proactive strategy.
When a firm can understand the root cause of an advisor’s dissatisfaction, they can start to work on resolving the problem. This might be helping advisors reconnect with clients, pinpoint growth opportunities, a commitment to investing in new technology to streamline admin tasks, giving more freedom or compensation packages.
“Ultimately, while advisor managers decide how best to work with each advisor, Fligoo’s goal is to give them the visibility and insights they need to make informed decisions.”
As to why wealth management firms should look to Fligoo’s AI, “We’ve proven that our technology can anticipate advisor movements with over 90% accuracy. But it’s not just attrition; our technology is built to predict a range of critical business matters in wealth management, providing firms with clear, data-driven foresight,” Garzón explained.
Fligoo welcomes firms that want to test the technology, before making a long-term commitment. provides 60- to 90-day pilot programs, allowing firms to test the solution and experience its impact firsthand.
Garzón concluded, “Imagine, for a moment, that a firm gains an unprecedented view into which of their advisors may be at risk, how their entire advisor base trends in terms of risk, and how these dynamics shift over time. Suddenly, they have a window into their advisor population that’s clearer than ever before.
“Once that insight is in their hands, it’s almost impossible to imagine going back to not knowing. Seeing that big picture of advisor risk and retention makes a permanent difference—it’s knowledge you can’t “unsee,” and it transforms how firms can proactively approach advisor retention and growth.”
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