The Fact: Advisors typically compensate staff with a base salary plus bonus. While 33% pay only a base, 56% add in a performance bonus or pay out a percentage of gross revenue. Only 5% of advisors pay a bonus plus percentage of net revenue (after expenses).

The Implications: Team compensation is an issue that challenges many financial advisors and most structures have tended toward simple calculations, such as a base plus percentage of gross revenue. Going forward we expect to see a shift toward structures that are more closely linked to the strategy of the practice. In some cases, that will mean paying bonuses based on net revenue and in some cases that will mean paying bonuses based on achieving specific mandates identified for each role.

The Idea: The compensation structure you choose should link directly to the objectives you have set for the practice. This may mean that each team member is compensated differently, which makes intuitive sense in that they contribute in different ways. A business manager might be compensated on net profit. A junior advisor might be compensated based on growth in assets from new or existing clients. An assistant, on the other hand, might be compensated based on successfully setting meetings with all clients or client satisfaction ratings. No matter how you compensate staff, you first step is to set measurable mandates so that the objectives of each role are clear.

The Next Step: The Business Success Kit provides you with the tips, tools and templates that you’ll need to enhance practice productivity and profitability. It’s the most practical and comprehensive guidebook available for financial advisors. For more information, visit www.AdvocisStore.ca and click on the Business Success Kit.