Adviser packages are shifting from a focus on revenue-linked bonuses to higher base salaries with KPIs based on client-centric metrics such as customer satisfaction and retention, Kaizen Recruitment senior consultant Fabian Ruggieri says.
“Bonuses for financial planners are being reduced, and some practices are even cutting them out,” Ruggieri says.
Where bonuses are still involved, he continues, engagement skills are being given just as much weight as the amount of business an adviser is writing.
“Obviously you need to write new business to add cash flow but [with] fee-for-service clients, it’s about building the relationship with the client as a salaried adviser,” Ruggieri explains.
While Kaizen places recruits in funds management, asset consulting, superannuation and wealth management roles, Ruggieri specialises in financial planners and ancillary staff within wealth businesses. He says the industry is booming, despite the headwinds, and that candidates for all positions are in high demand across the board as businesses look to expand.
The noticeable change in the way firms are approaching remuneration for advisers is due partly to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the negative perceptions about commission-based structures.
“Firms are saying, ‘This is your salary, look after your client and you’re going to be KPI’d on different metrics,’” he says.
Advisers are being compensated for reduced bonuses with higher base salaries, Ruggieri notes.
“Off the top of my head, I’d say an associate with 3-4 years’ experience in client services or paraplanning would be at around $80,000 to $85,000 with super,” Ruggieri estimates. “I’ve seen some associates up to $100K, including super.
“For advisers, it depends. If you’re coming over just to service a book, you’re probably looking at a package worth anything from $100,000-$120,000. If you’re an experienced adviser and you’ve shown you can build a book and get referral arrangements in place, you’re looking at around $120,000 to $150,000 (including super), at a top-tier firm. As a salary, that’s a little higher than in previous years.”
Ruggieri acknowledges the impact the Financial Adviser Standards and Ethics Authority has had on the industry, saying that there has been a surge in the number of non-degree holders, particularly older advisers, looking to transition to other roles.
“Obviously if they’re looking to leave the industry, they’ll wait to do so – they’re not going to leave four years prior to being required to leave – but I’ve had a lot of phone calls from senior advisers looking to move into a (business development manager) BDM role within a fund, platform or insurance company,” he says. “It’s quite common for senior advisers who have a lot of experience and are very capable not to see extra education as worth the cost and time. [But] they still feel like they’ve got a lot to give in the industry.”
Older advisers are also seeking roles as mentors, Ruggieri reveals.
“A lot of people have said to me that they’re quite interested in training roles and have asked if I’ve come across anything where they can train financial advisers or juniors to get them up to speed and [help them] understand the client engagement piece,” he says. “I probably have an average of 4-5 conversations a week with senior advisers who are looking to transition to one of those roles.”