When financial advisors surveyed for this year’s Report Card on Banks and Credit Unions size up their firms’ total compensation, many say that the firms doing it best offer elements beyond a basic salary.
Although firms across the board offer all types of compensation packages, advisors don’t believe they are being paid enough for the knowledge they have obtained and the sales they bring in.
The variety of compensation streams available at Toronto-based Royal Bank of Canada is one of the reasons they gave their firm the highest rating in the “firm’s total compensation” category, with an 8.7. “I think, both for compensation and the rewards and recognition, we have awesome programs,” says an RBC advisor in Atlantic Canada.
The bank has several facets to its compensation structure, says Michael Walker, vice president and head of branch investments. Depending on the type of advi-sor — account manager, financial planner or investment banker — the compensation can include salary, commissions and bonuses.
There is also a rewards and recognition program in which financial planners are nominated “by their peers and nominated by the branch people they work with” on a quarterly basis, says Walker.
Nominated financial planners receive performance points on three levels — bronze, silver and gold — that are redeemable for merchandise or travel. Walker adds that financial planners are ranked nationally on an annual basis and the top 20 go on a cruise with RBC executives.
Such comprehensive compensation packages also stand out at other firms, advisors say. For instance, Toronto-based TD Canada Trust‘s compensation focuses on motivating advisors, who gave their firm a rating of 8.2 in the category. Says a TD advisor in Ontario: “The bonus structure is wonderful. There are trips and prizes if it’s an outstanding year.”
But even with these different forms of compensation, advisors at all firms — even at RBC and TD — see room for improvement. In fact, there is a gap between performance and importance ratings at every firm, which indicates that advisors’ expectations are not being met. This gap ranges from a difference of 0.5 of a point at TD, whose advisors rated compensation at 8.7 in importance, all the way through to Edmonton-based Servus Credit Union, which had a performance rating of 6.7 vs an importance rating of 8.5 — a difference of 1.8 points.
In part, advisors say this dissatisfaction stems from the fact that the knowledge they need to perform their jobs — from educational credits to industry and product knowledge — is not reflected in their pay.
@page_break@”They’re underpaying us,” says an advisor in Ontario with Toronto-based Bank of Nova Scotia. “It’s a flat salary, totally based on performance, and we work with a wide range of [debt products] and investments. So, our knowledge has to be so up to date and the compensation’s not competitive with the market.”
Anatol von Hahn, executive vice president, personal and commercial banking with Scotiabank, says the compensation for having such knowledge is already built into the pay scale: “The designations are job requirements. In essence, if you hold a position, you must be qualified for that position. And so, the base salary is already based on [that].”
Instead, von Hahn says it’s how advisors perform in their roles that sets them apart. The bank motivates staff “to perform at the highest levels” through individual sales goals that are determined by a variety of factors — from geography to sales of investment and debt products.
Still, Scotiabank advisors say they work hard to keep their knowledge and education up to date, so they want to see that reflected in their pay. “I’ve seen [how] others in the industry [are recognized],” says a Scotiabank advisor in Ontario. “And with the credentials I have, I don’t think I’m getting the recognition [I deserve].”
Advisors with Toronto-based Canadian Imperial Bank of Commerce share similar concerns. Says a CIBC advisor in Atlantic Canada: “They need to revisit the compensation model. It’s one area in which, if they are not careful — especially with those of us who are more accredited — we’ll start to leave. Not a year goes by without me being approached.”
Advisors with Servus also want their firm to take a look at their compensation model. However, these advisors want their sales ability recognized, as they point out that bonuses and commissions don’t seem to be competitive. Says a Servus advisor in Alberta: “I think the amount of percentage that we are receiving from sales is low.”
Servus advisors have bonus levels they can reach, depending on their position. The credit union has both financial advisors and investment specialists. Financial advisors deal with clients with assets of up to $25,000 at the branch level, while investment specialists deal with clients with $25,000 to $150,000 and work in more than one branch, explains Ken Robinson, Servus’s assistant vice president, wealth management.
The pay for Servus financial advisors includes a base salary and a “bonus of up to $4,000” a year, Robinson says, earned either by hitting mutual fund sales targets or by referring clients to the wealth-management team. Investment specialists, meanwhile, receive a payout of 25¢ on the dollar once they “hit a revenue target.”
IE