Solid compensation takes on many forms: Includes charts

At the top of the list is Mississauga, Ont.-based IDC Financial Inc. — and that’s because its commission structure is cut and dried, says president Ron Madzia: “The overrides are determined by our carriers, and our compensation is very straightforward. Each of the carriers mandate the commissions that they will pay, which is contractual. We know in advance what we can expect from the insurance companies.

“The way our business works is that the insurance brokers get all the commissions. We don’t touch commissions. What we do share with the brokers is overrides,” he explains. “Quite frankly, the advi-sor gets the bulk of that as well, and some of the breakdown is related to productivity. There’s no hard and fast rule; everybody is different. But the brokers get the bulk of it. All we try to do is what’s right and be fair.”

IDC advisors completely agree that their MGA is doing what’s right and fair when it comes to compensation. An IDC advisor in Ontario, who gave the firm’s compensation structure high praise, says: “IDC is a classy organization that is extremely fair when negotiating with advisors.”

A colleague in Ontario, who gave the firm a perfect score of 10 in the compensation category, adds: “IDC is open, fair and negotiable.”

Toronto-based MGA World Financial Group Inc. takes a completely different approach to its compensation structure, but, like IDC, it is consistent and open from the get-go, WFG advisors say. The firm focuses on recruitment as the primary way advisors can increase their compensation. So, if they recruit more advisors, their compensation increases accordingly, a fact that is stated at the outset to advi-sors who join the firm.

“We have a tiered commission structure,” says Richard Williams, WFG’s president. “It starts with brand new associates who come into our business. They have a commission level, a payout. Then, as they graduate to different levels and succeed at different things, their compensation increases accordingly.

“Part of our structure is recruiting; part of it is production,” he adds. “So, both of those working together will help elevate someone up the tiers and, as a result, they will enjoy a higher compensation level.”

But while most WFG advisors are fully aware of how the compensation structure works, some find it an uphill battle. “I think the compensation can improve,” says a WFG advisor in Saskatchewan. “But I know how the business is structured: you are rewarded more, further on; but it is tough starting out.”

Nevertheless, a WFG advisor in British Columbia says, “Even though WFG starts you off at a lower level, it is worth it in the end.”

A WFG advisor in Ontario adds: “Our structure, which allows us to build on our agency, is what I like best. We don’t have to rely 100% on our own efforts.”

The story is somewhat different for Mississauga, Ont.-based RBC Life Insurance Co. Its high rating in the category suggests that total compensation is about more than just the money. The firm’s strong benefits package and the Royal Bank of Canada employee savings and share ownership program, which allows RBC Life advisors to buy shares in the parent bank — which the company then matches, to a certain level — trumps the fact that many of the advisors surveyed believe they were getting less than sufficient pay from RBC Life.

An RBC Life advisor in Manitoba says that, all things considered, RBC Life offers an enticing compensation package. “The dental benefits, RESSOP and the defined-contribution pension are pretty decent,” he says, when compared with the rest of the industry.

A colleague in Quebec concurs: “When you consider RESSOP, compensation, bonuses, benefits, flex benefits and the pension — it is very broadly based.”

An RBC Life advisor in B.C. stresses the impact that RBC Life’s benefits package has on its total compensation. “With the benefits package we get,” he says, “I am very satisfied with the compensation overall.”

Although advisors with IDC, WFG and RBC Life are satisfied with their firms’ overall compensation, advisors at other firms were nowhere near as content. London, Ont.-based Freedom 55 Financial, for instance, drew the wrath of its advisors, primarily because of its sales targets.

@page_break@”It’s not as competitive as the MGAs out there,” says a Freedom 55 advisor in Ontario. “I have to meet a certain number of sales to trigger a certain bonus. If I were elsewhere, I would not need to do it. It’s pathetic, actually.”

Adds another Freedom 55 advi-sor in Ontario: “The targets are impossible to reach. They are set by the managers and change every year, so that advisors are paid less and less each year.”

Another insurer based in southwestern Ontario also had unhappy sales agents when it came to rating total compensation. Guelph, Ont.-based Co-operators Group Ltd. announced a change to its compensation structure in June, and many in that firm’s dedicated sales force did not spare the rod in lambasting the insurer when they got the word there would be changes.

“Co-operators has a devastating reduction in compensation planned,” says a Co-operators agent in Alberta, “and I hate it.”

Adds another Co-operators advisor in the West: “It is making a big mistake by initiating this new compensation structure.”

Co-operators’ compensation restructuring has two major components. First, Co-operators is going to drop the maximum number of bonuses advisors can receive to three from five. In addition, advi-sors will have to have higher loss ratios in order to qualify for higher compensation rates.

“We have really tied the loss ratio results of the agent into their incentive compensation,” says Jim Wingrove, Co-operators’ vice president of agency and sales support. “We can’t continue to pay high incentive commissions if the agent isn’t doing his or her part in the organization. If the agent has a good, profitable book, he or she can still earn the top-rate commission that he or she had prior to the changes.”

The firm’s original contract in 1993 consisted of three bonuses; over time, it had added more. But after a careful evaluation, Wingrove says, it was determined that the firm’s value proposition would remain one of the most competitive in the industry — even with the changes.

The first bonus will be eliminated by the end of this year, Wingrove says; the second bonus won’t be phased out until 2010, allowing advisors time to work with district managers to understand the changes better, as well as providing time to those advisors who may need to increase their productivity.

Although these changes may look as if things aren’t exactly coming up roses for Co-operators’ agents, Wingrove and the rest of the management team may be onto something with these changes, as one Co-operators advisor in Saskatchewan points out: “It’s a fair and equitable compensation structure. We treat everybody pretty similarly. People at the head of the curve should be compensated more than those who aren’t.” IE