Financial advisors are buzzing these days with long-needed discussions about fee structures and the way clients pay advisors for their services. But setting a fee structure is only half of the equation. The other half is the distribution of compensation throughout the firm, from support staff to ownership.
Compensation is the single biggest investment most advisors make to ensure the ongoing success of their businesses. Many owner-advisors who spend considerable time and effort determining how to reward their employees neglect to devote the same attention to their own compensation. As a result, they become accustomed to discretionary compensation in good years and find themselves unprepared to adjust in difficult ones. And those who do take the time to develop a thoughtful owner compensation structure often outgrow their initial policies a few years down the road.
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