There’s a real dichotomy between independent advisors and those who work at dedicated sales agencies in terms of their satisfaction, not just with their take-home pay but also with their firms’ compensation programs.
On one hand, the percentage of independent advisors earning more than $100,000 a year rose to 78.4% from 66.5% in 2010. So, it’s no surprise that satisfaction among independent advisors is on the rise when it comes to their total compensation.
In contrast, the percentage of advisors with dedicated sales agencies earning more than $100,000 annually dropped to 47.9% from 63.5%; furthermore, some direct sales agencies’ advisors report dissatisfaction with their firms’ total compensation packages because they’re structured to benefit higher-end producers.
There are various reasons why independent advisors — especially those who ply their trade with the managing general agencies — are satisfied with their compensation packages. One of them is the ability to have a say in how they are paid. “I’m currently negotiating my compensation,” says an advisor in Ontario with Woodbridge, Ont.-based Hub Financial Inc.
As Terri DiFlorio, Hub’s president, says of the process of negotiating an advisor’s compensation: “Its always done on an individual basis. There are so many factors that would go [into] determining the overrides or bonuses that we would offer.”
Another MGA that allows advisor input in determining payout is Calgary-based PPI Solutions Inc. “It’s based on a combination of the experience that the advisor has, and the support we have to give [the advisor] — and the volume of business that we do,” says Jim Virtue, PPI Solutions’ president and CEO. “We figure out a mutually acceptable compensation structure based on all of those things.”
Meanwhile, although advisors with PPI Solutions’ sister firm, Toronto-based PPI Advisory, say their firm pays lower overrides than competing MGAs, the added value they receive in support services for their high net-worth clients more than makes up for it.
“There are companies that pay more, but PPI delivers great value,” says a PPI Advisory advisor in Ontario. “Compensation is not the most important thing.”
Explains Yves Bergeron, president of PPI Advisory: “I don’t try to recruit and attract any kind of advisors based on the highest payout. I want to attract independent advisors based on the best and most focused product approach, support staff and technical professional expertise.”
All is not rosy among the independents, however. Winnipeg-based Great-West Life Assurance Co. received the lowest rating among the independent firms because it has raised the bar for performance — and if advisors don’t make the cut, they are left out.
“I used to be invited to a conference for the top 10% of producers every year, but they raised the qualification,” says a GWL advisor in Ontario. “It’s a high-class trip, and they invite top-notch speakers who offer useful content.”
Feedback from GWL advisors revealed that these programs are valuable to GWL’s Gold Key advisors — and frustration with the rising level of qualification to attend these conferences is the main reason the firm’s rating in the “firm’s/MGA’s total compensation” category declined to 7.8 from 8.2.
And the recent introduction of a new conference for top performers may have exacerbated this dissatisfaction. “This year, we launched something called Advance Practices, Advance Programs,” says Hugh Moncrieff, senior vice president of the Gold Key distribution network with GWL. “This was a developmental opportunity available to President’s Circle and Gold Key Signature advisors … that featured industry-leading speakers and the opportunity for participants to share best practices.”
Meanwhile, advisors with the dedicated sales agencies also are dissatisfied with the special treatment for high producers. Advisors with Mississauga, Ont.-based RBC Life Insurance Co.are particularly unhappy with their payouts after the firm recently changed its bonus structure to reflect a push on productivity; as a result, RBC Life’s rating in the total compensation category dipped to 6.9 from 7.1 in 2010 (which, in turn, had declined from 8.1 in 2009).
“People at the lower end will have to produce at higher levels,” says Ernie Murdoch, RBC Life’s senior vice president of career sales, “to get the same amount of bonuses they did in the past.”
Although some RBC Life advisors acknowledge that their firm is just setting the benchmark higher, others are displeased with the changes. “They favour top producers,” says an RBC Life advisor in Ontario. “I’m an average producer, so I am not happy.”
Meanwhile, Waterloo, Ont.-based Sun Life Financial (Canada) Inc. also focuses on rewarding top producers, which drew the ire of some of its advisors. For instance, a Sun Life advisor in Atlantic Canada says: “You’re paid more if you sell more. It encourages not having the best interest of the client at heart. We should be paid equally, regardless of sales.”
Nevertheless, Sun Life saw its compensation rating increase by half a point to 8.1 from 7.6. The reason? “They treat us well and always come up with incentives to push us all the time,” says a Sun Life advisor in Ontario. Those incentives include getaways and gifts — as well as an annual conference and convention trip.
Sun Life advisors’ satisfaction can also be attributed to the firm’s push for long-term advisory careers. In fact, the “levelled” commissions compensation regime, in which payouts are spread out over the life of a policy rather than during the first year, shows that Sun Life values career longevity amongst their advisors.
Says Vicken Kazazian, senior vice president of Sun Life’s career sales force: “We’ve designed our compensation system to support and encourage individuals who are interested in an advisor role with Sun Life for the long term.” IE