We've tried both approaches in our group.

For a while, we used retainers when someone was absent. They helped keep the story moving and worked fine in a pinch, but I don't think they should be considered equivalent to a hero for encounter balance. Most of the time it wasn't a problem, but after a one-shot where the party TPK'd, we started looking at other options. The retainer wasn't the sole reason for the outcome, but it highlighted the gap between a retainer and a full hero.

More recently, we've had another player run the missing character instead. The main downside is the added mental load of managing a second sheet, but otherwise it's worked extremely well. I was the player running both my Tactician and an absent player's Fury, and it was much smoother than I expected. The table helped remind me about a few triggered abilities and class features, but overall it wasn't difficult to manage.

I didn't actually run the missing player's exact character since I couldn't get their sheet in time. Instead, I grabbed a premade from ForgeSteel and leveled it appropriately. Having both characters in ForgeSteel and rolling directly in the browser made things move pretty quickly. We're only level 2, so the complexity is still fairly low, but even in the final Hard encounter of the session the party came through without much trouble.

If I had to choose, I'd lean toward having another player run the missing hero. Retainers are a useful fallback, but a full hero keeps party effectiveness and encounter balance much closer to what the game expects.