When it comes to financial advisors and their total compensation, a clear dichotomy exists: on one hand, advisors surveyed for this year’s Report Card series report steadily increasing income; on the other, they remain very dissatisfied with their firms’ compensation practices.

According to this year’s Report Card data, the percentage of advisors earning an annual income of less than $100,000 is dropping, as 31% say they earn this much compared with 34.1% in 2010. However, the percentage of advisors now making between $100,000 and $500,000 has risen to 53.2% compared with 50.5% last year.

Chart: Total Compensation

Still, much like in previous years, the “firm’s total compensation” category — which also takes reward and recognition programs into account — had one of the highest gaps between the overall performance average rating (8.1) and the overall importance average rating (8.9) when all the ratings in this year’s Report Card series were averaged out.

Advisors at the banks and credit unions were the least happy with their pay as they consistently earn the least among the advisors in the financial services industry. Case in point: 68.3% of these advisors earn less than $100,000 a year — more than double the overall average.

In fact, although advisors at the deposit-taking institutions reported the largest jump in the percentage of advisors earning between $100,000 and $500,000 — to 31.3% from 22.7% — many complain that their compensation is simply not competitive enough. Says an advisor in Ontario with Toronto-based TD Canada Trust, echoing many comments among advisors in this channel: “For the responsibilities and the jobs advisors do — [they’re] very complex and not just about investments — I should be compensated more than what I am.”

For the rest of the financial services industry, much of the dissatisfaction comes from changes firms have made to payout grids and targets in the past year or so.

Advisors at Toronto-based Richardson GMP Ltd. , which saw its rating in the compensation category drop to 9.0 from 9.4 year-over-year, were dismayed with the brokerage firm’s decision to cut payouts by 20% for individuals and teams earning less than $350,000 in revenue but also reward advisors and teams with better performance. These changes have led to the firm shedding underperforming advisors, says Andrew Marsh, Richardson GMP’s CEO.

Similar changes at other firms also have hit lower-producing advisors the hardest. At Toronto-based BMO Nesbitt Burns Inc., changes were made to the lower end of the payout grid, resulting in the firm rewarding advisors with bigger books. “The low-end producers are being squeezed out,” says a Nesbitt advisor in Ontario.

Adds a colleague in the same province: “They’ve taken from the smaller producers and rewarded [the] bigger producers.”

Richard Mills, co-head of Nesbitt’s private client division, says the adjustments tie into the firm’s philosophy of recognizing good work: “We continue to reward people who are growing their businesses and bringing new assets in because that, to us, is a reflection that they’re doing a good job for their clients.”

Meanwhile, a different kind of change to the compensation package — a tweak to the production bonus structure — has ruffled feathers at Mississauga, Ont.-based RBC Life Insurance Co. Much like the trend happening at other firms across the financial services industry, RBC Life’s new model pays out more to higher producers while lower producers have to reach higher targets to earn the same bonuses they had achieved in the past. “They favour top producers,” says an RBC Life advisor in Ontario. “I’m an average producer, and I am not happy. I am losing 10% [in bonuses] a month.”

The alterations to RBC Life’s bonus structure are part of a plan to create a small career sales force that is very productive, says Ernie Murdoch, the firm’s senior vice president of career sales: “Our people understand that we are looking for them to perform at a higher level.”

Meanwhile, firms that made it easier for advisors to earn more received positive feedback from their advisors. Calgary-based Leede Financial Markets Inc. had the highest compensation rating in the Brokerage Report Card because it added a 60% payout level for advisors earning more than $600,000. (The base payout for all lower levels of production is 50%.)

Montreal-based National Bank of Canada, for its part, saw its compensation rating increase to 8.1 from 7.5 in 2010 as a result of a stronger focus on awarding bonuses based on net investment sales and managed products rather than on credit products.

In addition to monetary compensation, reward and recognition program incentives often play an important role in keeping advisors satisfied.

“The incentives and recognition of wholesale planners is awesome,” says an advisor in Alberta with Waterloo, Ont.-based Sun Life Financial (Canada) Inc. Sun Life advisors can win trips, gifts and awards for their achievements.

Similarly, Mississauga, Ont.-based PFSL Investments Canada Ltd. ‘s advisors praise their firm’s “peer recognition” and “stage recognition” programs. For the latter, the firm calls top performers onstage during quarterly company-wide meetings. PFSL also gives these high-performers custom-made T-shirts, lapel pins and wristbands they can wear to demonstrate their success.

“Getting money is good, but that goes directly into your bank account,” says Jeff Dumanski, PFSL’s president and chief marketing officer. “Being able to wear that success — and visually show others that you are being recognized for your hard work — goes a long way.”

Then, there are firms — such as Toronto-based Assante Wealth Management (Canada) Ltd. — that have struggled with both aspects of compensation. “I don’t think they do a good job of reward and recognition programs,” says an Assante advi-sor in Ontario. “They don’t drive people to do better. It’s the same people [being rewarded] every year.”

Assante also drew the ire of its advisors because it hasn’t brought its pay back to pre-recessionary levels. In 2008, compensation was reduced because of lower volumes; now, despite revenue returning to pre-2008 levels, the grid has not been changed back.

“We assisted the corporation through lean times,” says an Assante advisor in Ontario. “Now that assets under management are starting to build again, we should see reciprocity associated with that.”

Not surprising, the firms that decided not to cut back on compensation during or after the recession have won the approval of their advisors.

“We made a conscious decision — even though we knew it was going to be a very tough time — to stay the course on our grid,” says Mike Reilly, president and national sales manager with Toronto-based TD Waterhouse Private Investment Advice. “Our people were working especially hard and doing the right things for our clients. I think that hard work needed to be recognized.” IE