How do you put together a package to tempt the right adviser to your firm?
Posted by: Jessica Wood on Mon 17 November 2014
Chris Budd’s article has clearly got people interested, with over 1100 views and sitting at 13 comments. Chris has raised some interesting points, and I wanted to share our thoughts on his conclusions:
To recap these were:
- Some of those firms are using the term ‘fee based’ in a pretty loose sense (for example a firm that quotes a ‘fixed fee of 3%’). They remain transactional in their nature and the advisers are still targeted by income rather than (for example) client retention.
- Those advisers at firms who are genuinely fee based and providing relationship based advice are quite happy where they are.
- There is a plethora of advisers who are faced with a difficult decision. Either take a job with high earnings but which you don’t enjoy, or take a job that you enjoy and allows you to sleep at night but which doesn’t allow you to earn as much.
First off it’s my belief you can still earn good money, and sleep at night, and do a good job and be rewarded accordingly for it.
But it’s a hard one to give a straight answer to, I see different companies and different angles all the time, and what they offer their potential employees remuneration wise, and it varies from company to company. But what is right and wrong? And ultimately what else can companies do to attract the right type of candidate to their firm, particularly when they can’t match on salary?
There are so many different models in the market place, you know there are companies out there offering a slightly lower basic but with the opportunity to earn overall higher income based on bonus. This bonus is geared towards client retention, 360 measure of their overall performance, in terms of compliance, this that and the other. On the other end of the scale there are other companies out there providing top end salaries with limited bonus opportunities, but they are being rewarded handsomely on the basic. (£75K basic).
A lot of companies don’t cap the bonuses being offered. Somebody half decent if they’re good at what they’re doing, even in a fee based model, should be pulling in £75K - £80K but half of that would be basic, and the other half bonus.
Obviously you need to be competitive in your salary because you need to attract staff but there’s so much still differentiating in the industry. So why would someone want to opt for a lower salary and have to work hard for their bonus, when they could potentially get a higher salary and as long as they do their job well but get a guaranteed £75K wage?
It’s important to recognise when people move jobs they move for a variety of factors, it’s not always about the money. Often it’s things like lack of direction, management structure, chopping and changing that make people leave a well paid job. Often it’s about increased client bases to work from, it’s about better income potential overall, and there doesn’t seem to be an industry standard in terms of what people are remunerated.
The remuneration package generally gets translated into what type of business model the company has in the first place:
- Run on profitability per adviser?
- More money coming in in fees and worrying about that sort of stuff later?
- Is there a proper plan in place to work out what they can afford to pay someone as a basic salary and what other measures can be used to remunerate that person?
It can’t all be based on what somebody is being offered salary wise. If in a smaller business, you want your business to be sustainable, and grow, and keep those people with you over the long term to service your client base you built up over years, then yes why not offer them some sort of equity participation that they can work towards?
Some companies are still very driven by the need for new clients, and would like to get advisers for as cheap as possible and dangle the bonus in front of them. They know how many millions they’d like each adviser to have under management.
Some companies want the hunters – that go out and get new business, others want the farmer – who cultivate and tend to existing relationships. Others want a combination of these skills.
It’s not just about remuneration, other considerations include the culture of the firm. It’s not just based on their ability to do the job, but they’ve got to fit in with the existing team. The culture and ethos has to fit, particularly with smaller firms where this is more focused.
If your attitude in your firm is that each client is a client of the firm and everyone plays a role in looking after that client, as opposed to a firm where the clients are more considered to be the adviser’s clients, then there will be a level of adjustment switching from one environment to another. In this case you’d probably be looking for a team player rather than somebody who works more independently.
These are all considerations over and above the level of experience and ability of an adviser, both for the adviser themselves when considering a change in their work place and for the firm hiring.
People have different strengths and we should play to them. You could even argue do you need a financial planner to do long term servicing, register your paraplanner to manage that relationship, especially if you have a paraplanner who’s happy to be client facing and has client relationship skills as well as the analytical skills required.
Ultimately we can debate this topic until the cows come home because every firm is different. However we’re trying to establish what the key motivators for someone either leaving their job, staying, or choosing a new firm with our survey and what it is employers are looking for. It’s not just a question of how to remunerate, there’s also a shortage of candidates in today’s market place, which means attracting the right person for your firm is even more challenging. So being able to differentiate yourself, not just with salary, is paramount in today’s environment for those looking to recruit.Image credit