compensation / illustration

Canada’s big banks continue to tweak their compensation structures, with client satisfaction metrics taking on greater importance.

In this year’s Report Card on Banks, the “Total compensation” category had an average rating of 8.1, up from 7.9 in 2019. (Research was paused in 2020, so year-over-year comparisons are not possible.) The new “Bonus structure” category had an average rating of 7.9.

CIBC had the highest rating for both categories at 9.1 (advisors with the bank work for CIBC Imperial Service). CIBC’s compensation rating was up significantly from 8.5 in 2019.

“The bank made [compensation] more consistent,” said a CIBC advisor in Quebec, who noted the bank increased base salary for advisors and reduced its reliance on traditional bonuses. “Not every year is going to be a big year, [but the changes] helped a lot with the volatility that we saw last year.”

For bonuses, CIBC placed more emphasis on the results of client satisfaction surveys. “They literally eliminated commissions but gave us more bonus [pay] on customer satisfaction [and] service,” said a CIBC advisor in Ontario.

“[The] client experience and how clients feel are really important, and we are active in surveying [clients],” said Peter Lee, executive vice-president, banking centres, with CIBC. “[We] have re-aligned our compensation model to reflect what our advisors most value.” He confirmed that CIBC uses both individual and business metrics when calculating compensation.

Toronto-Dominion Bank (TD) also saw its compensation rating improve significantly this year to 7.8 from 6.9 in 2019. Despite the increase, TD was rated second-lowest for compensation and had the lowest rating (7.3) in the bonus category.

“This is the first year in my career I’m making less [than the prior year]. It has nothing to do with production, [and] more to do with the model,” said a TD Wealth Financial Planning advisor in B.C.

“There have been some changes that have us getting paid less, even though the workload is still very intense here,” said a TD advisor in Ontario.

David Terry, vice-president and head, TD Wealth Financial Planning, said the bank made “some changes to our compensation structure for 2021,” which included the addition of an advisor award based partly on the quality of planning for clients.

Through a process that began in 2018, compensation and bonuses at TD have been tied to the size of an advisor’s practice, as well as clients’ contentment levels and the services they value.

“Any change [in the] compensation structure attracts some criticism and some consternation along the way,” Terry said, adding that the bank spent a lot time on feedback sessions that led to TD altering “the timing of some of the changes that we implemented.”

Bank of Nova Scotia had the lowest rating in the total compensation category at 7.6 (down from 7.7 in 2019), and a middling 7.7 rating in the bonus category. While some advisors said they were satisfied, others felt the compensation structure was unfair.

“They changed our targets and our pay structure without warning. They started putting people on notice because of targets, even during Covid,” said a Scotiabank advisor in Ontario.

Some Scotiabank advisors felt their bonus metrics could have been adjusted to better reflect the pandemic environment. Still, one advisor in Ontario called the pay grid “standard,” adding that a “big component” of compensation was tied to financial planning, an aspect of the job advisors should be good at.

Sloane Muldoon, senior vice-president of retail performance with Scotiabank, said compensation is based on several “standard” factors, and any changes made to compensation were meant to help advisors.

Muldoon said the bank takes a “balanced approach” to in-branch advisor compensation, taking into account “individual performance, customer experience [scores] and compliance.”

Nearly two years ago, Scotiabank began allowing advisors to take courses to enhance their skills and “move forward in their career, which also includes a salary increase,” Muldoon said. “We’ve had really positive feedback from our advisors on this program, as it gives them clear career progression.”

Total compensation ratings for the remaining three banks were little changed from two years ago, but executives said they were placing greater emphasis on client satisfaction.

For example, at RBC, a portion of advisor compensation is based on “client experience activities and behaviours,” said Michael Walker, vice-president and head, mutual funds distribution and RBC Financial Planning, RBC. Advisors rated RBC 8.6 for total compensation.

“Especially with the client-focused reforms, [we want to] make sure we include metrics that capture and really drive our advisors [to] act in our clients’ best interests,” Walker said.