Compensation is a key motivation for many employees to alter jobs, and broker-dealer reps aren’t 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 purpose they joined a brand new agency.
General, 7 in 10 broker-dealer advisors say they’re happy with their present compensation constructions, in response to the report, however these working within the wirehouse channel could also be extra more likely to think about looking for 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 unbiased broker-dealers.
Cerulli discovered that many companies, notably wirehouses, persistently revise their compensation plans with a purpose to obtain corporate-level initiatives and enhance advisor productiveness. These adjustments might profit the agency, however advisors can discover them exhausting to navigate, particularly if adjustments are frequent.
Sixty-two % of wirehouse advisors surveyed stated their compensation plans have grow to be too complicated, and 47% complained that their agency modifies its compensation construction too typically.
In keeping with Cerulli, these adjustments can be off-putting to advisors in sure segments, primarily based 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 method can backfire if advisors discover the thresholds unrealistic or unattainable, and compensation is a chief motivator for advisors who change companies.