Wachovia Securities gave its 8,000 advisors a new “lucky” incentive for expanding their fee-based business on March 13: the “4front” bonus plan, which aims to reward FAs for inspiring customer satisfaction and loyalty, a key goal of Wachovia Corporation and its branding efforts.
“Beginning in 2006, we decided to put a fair amount of effort into understanding how client loyalty is the primary driver in the affluent marketplace,” says David Monday, chief growth and productivity officer. What stood out, according to Monday, were the importance of having a financial plan with reasonable goals, working with an advisor to monitor progress in reaching the goals, and seeing that the advisor cared by his frequent, personal contact. “We heard it over and over in focus groups,” Monday adds.
The new client-inspired bonuses focus on households in which 60 percent of assets under management are in a fee-based platform; the minimum level of assets is $250,000. For such households, advisors are expected to develop an investment plan using Envision (the firm’s planning software), contact clients six or more times a year, and score high on most criteria in a voluntary customer-satisfaction survey. FAs must also complete yearly training in client service and loyalty.
In addition to their traditional productivity bonuses, the new plan offers FAs with 150 households the chance to earn up to $100,000 per year and a total of $1 million over time. The $100,000 award will come to those bringing in at least $10 million in net new assets in a 12-month period and with $10 million in loan balances.
The firm is also offering one-time bonuses of up to $100,000 to advisors with 100 households and $10 million in new assets, $50,000 to those advisors with 50 households and $6 million in new assets and up to $25,000 for those with 25 households and $3 million in new AUM.
To obtain these bonuses, Wachovia executives say, advisors must raise their AUM via new households or by providing more services to existing households. The awards are paid as deferred compensation and vest over six years.
“Very few clients have contact with an advisor six times a year, have a plan in place and are not loyal,” explains Monday.
“We expect significant participation, though there is a level of effort required to going through this,” he shares. “Client loyalty is hard work. We are not saying it’s easy, but we are saying it’s worth it.”
Training in the new loyalty program began in March and client surveys for 4front are now ongoing. The first $100,000 4front bonus should be rewarded in July 2008. “We’ve talked about it for a year now, and people are very excited,” Monday concludes.
o New client-service, loyalty bonus
o Awards of $25,000-$1 million