We planted cattails along the edge to stop the wave erosion. Worked well, just be careful - plant the wrong thing and you may spend the rest of your life trying to kill it after it overtakes your impoundment.

14-16 ft tall and only 40 ft wide? With a 5� top width, that leaves you around a 1:1 slope. That is steep and sounds like what could be your problem. Most soils are going to sluff (slide downhill) when saturated on a 1:1.