Why aren’t bank advisors happy with their compensation?

Even though the performance averages for “total compensation” and “bonus structure” were similar year over year — 7.8 in 2023 versus 7.9 in 2022; and 8.1 versus 7.9, respectively — advisors’ comments belied the flat results.

“[The banks] needs to keep it on par with inflation,” said an advisor in Ontario with Bank of Nova Scotia (BNS). BNS was rated 7.5 for total compensation, unchanged from 2022, and 8.3 for its bonus structure, up from 7.6.

“With inflation being high, wages should be bumping up,” said a planner in British Columbia with Royal Bank of Canada (where planners work with RBC Financial Planning). The planner added that portfolio revenue had been dropping due to poor market returns, further eating into take-home pay.

RBC was rated 8.0 for compensation and 8.3 for bonuses in 2023, similar to last year. The bank told Investment Executive that it had made no significant changes to compensation in recent years, but that financial planner associate support had increased by 50%.

As for BNS, the bank said in an email that it gave a one-time, 3% increase in June 2022 to “all Scotiabank employees at job levels [two through six] in Canada,” which includes branch advisors. This was in addition to regular annual salary adjustments related to performance.

The bank with the lowest ratings in both advisor pay categories was National Bank of Canada(NBC). It was rated 7.2 for compensation in 2023, the same as last year, and 7.5 for its bonus structure, up from 6.8 in 2022.

“[Pay] has deteriorated,” said an NBC advisor in Quebec. “We were told the fixed pay would be lower because the variable salary would be more attractive. That’s not what [has] happened.”

“Compared to the responsibilities we have, [the compensation] is not impressive,” especially compared to the pay for commission-based colleagues, said another NBC advisor in Quebec.

Feedback on bonuses was more positive, but measured. “[We’re] lucky that bonuses compensate for our base salary,” said another NBC advisor in Quebec. “[But] I would rather have more salary.”

Others suggested a simpler structure. “[There’s] a lot of small criteria to make a quarterly bonus. It is too variable,” said another NBC advisor in Quebec.

“Our employees are not only evaluated on financial results, but they’re also evaluated on the right behaviours,” said Tony Scalia, vice-president of investments with NBC. Scalia said NBC had not changed its compensation model in the past year, though it reviews salaries annually.

One behavioural metric is whether advisors are delivering on financial planning targets throughout the year, Scalia said. Providing this service should not be “a sprint in September and October to do your financial plans. It’s part of the behaviour that we expect on an annual basis,” he added.

Nancy Paquet, who will become executive vice-president of wealth management with NBC on Nov. 1, said restricted stock units have been offered to branch planners since 2017. “Our top 25% [of planners] have incentives to grow with us and stay for a long time,” she said.

CIBC, where advisors work under the Imperial Service banner, was the highest-rated bank in the two pay categories again in 2023, at 8.5 for compensation and 8.4 for its bonus structure. Yet both ratings were down from 2022 (from 8.8 and 8.9, respectively).

While several CIBC advisors used the term “fair” when describing their pay, others expressed dissatisfaction with changes made to their compensation structure over the past few years.

“We used to be on a [model] that was more performance-based, but gradually they moved away from it,” said a CIBC advisor in Ontario. “They make you do the same business, and you make much less.”

A CIBC advisor in the Prairies suggested, “More variable bonuses [are] needed,” while an advisor in B.C. said, “We are [all] on different scales. They could take into consideration inflation when determining scales.”

Rory Mitz, senior vice-president and head of CIBC Imperial Service, said, “We’ve made consistent investments over the past while in both salary and incentive opportunities.” The focus, he said, is on “providing quality advice to our clients, and retaining and motivating our team members.”

Mitz acknowledged the increased cost of living. “Keeping an eye on the market [helps] ensure that our compensation programs are competitive,” he said.

At Bank of Montreal, the pay structure for branch planners consists of a base salary plus several commission-based elements. The bank was rated 8.1 for total compensation and 7.9 for bonus structure, similar to 2022.

Toronto-Dominion Bank, for which performance improved for total compensation to 7.7 from 7.2 a year ago, hasn’t made any “further material changes” following a pay increase for new planners in its branches in August 2022.