(Hollywood, Florida) -- Some banks are having a tough time making the changes to their advisers’ compensation models that will be necessary under a fiduciary rule. This was just one takeaway from a panel discussion at the annual Bank Insurance & Securities Association conference in Hollywood, Florida.
With less overall revenue, plus a need to implement a major shift in focus, changes in comp models are widely considered inevitable. Still, those changes can be difficult because a new set of goals will be necessary. Once banks think through all the options, they sometimes end up saying simply saying that they want “a plan close to what [they] have now, but compliant,” said Peter Bielan, principal of Kehrer Bielan Research & Consulting, and a participant in the “Anatomy of Successful Incentive Plans” session.
Bielan said that many banks get excited about a base-plus-bonus model as a possible change, but then the discussion hits major snag when the focus turns to adviser attrition.
Still, that model was used by another panelist’s bank. Tim Coleman, senior vice president at Centier Bank, said that the advisers at his bank who adopted a planning strategy saw their compensation decline. So the bank added a bonus for planning business, with incentives based on the number of plans created, on top of a grid.
Moderator Paul Werlin, president of recruiting firm Human Capital Resources, asked whether the comp model was helping or hurting recruiting, but Coleman said it was too soon to tell.
Whatever model is used, Bielan urged the industry to incentivize long-term thinking on the part of advisers, not just hitting a monthly goal.
A limited federal tax credit, an above-the-line deduction for non-itemizers and restrictions on those of itemizers represent three of the biggest shifts under the new law.
Raymond James accuses the widower of an advisor of using data stored on his wife's company-issued computer to solicit clients for a rival firm.
Tim Bender is a CPA and partner in the advisory practice at
But the industry isn’t there yet. In response to a question from Werlin, Bielan agreed that the incentives used in the industry are mostly for transactions, not specific behaviors.
Werlin also noted that non-financial incentives can help make an adviser’s work-life more pleasant, such as expense accounts, bigger offices or assistants.
Bielan agreed that advisers work satisfaction entails more than money. Advisers usually don’t quit their jobs just because they can get a small increase at another bank; they’re much more likely to quit because their supervisors aren’t supportive, he said.
