Answer: This is a complex question. Generally, planting shrubs next to a retaining wall is not a good idea because the root systems can put additional pressure on the retaining wall or its footings. If there is already a gap or imperfection in the wall underground then the roots will make it worse.
To fix an erosion or runoff problem you need to trace the water uphill to the source and consider how it can be redirected to solve the problem. Sometimes it is fairly simple such as redirecting a downspout, but in many cases it is a complicated issue. Solutions can involve regrading the area, digging swales to redirect the runoff, and/or installing drains. This type of runoff and erosion control should be evaluated and designed and installed by a professional with formal training such as a landscape architect.
It is impossible to make specific suggestions in this case without seeing the area in question. I would strongly suggest you work with a professional who can consult with you on-site. Good luck with the erosion problem.
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