Compensation is a key motivation for many employees to alter jobs, and broker-dealer reps are not any exception. In keeping with The Cerulli Report—U.S. Advisor Metrics 2022: Tendencies in Advisor Compensation launched this week, 45% of these who switched broker-dealers previously three years cited both the quantity or the construction of compensation as a key motive they joined a brand new agency.
General, 7 in 10 broker-dealer advisors say they’re happy with their present compensation constructions, in accordance with the report, however these working within the wirehouse channel could also be extra more likely to take into account in search of greener pastures than their counterparts. Twenty-four % of advisors working for a wirehouse agency expressed displeasure with their compensation constructions, in contrast with 5% of advisors at nationwide and regional companies and seven% of impartial broker-dealers.
Cerulli discovered that many companies, significantly wirehouses, constantly revise their compensation plans with a view to obtain corporate-level initiatives and enhance advisor productiveness. These modifications might profit the agency, however advisors can discover them arduous to navigate, particularly if modifications are frequent.
Sixty-two % of wirehouse advisors surveyed mentioned their compensation plans have develop into too complicated, and 47% complained that their agency modifies its compensation construction too typically.
In keeping with Cerulli, these modifications can be off-putting to advisors in sure segments, based mostly on their tenure, core consumer market or specialties. Focused compensation methods can enhance advisor retention and productiveness if practices are motivated to attain the best payouts. However this strategy can backfire if advisors discover the thresholds unrealistic or unattainable, and compensation is a chief motivator for advisors who change companies.