Financial advisors at the wirehouse firms are facing more complex compensation plans in 2015, compensation experts say.
“It is becoming close to being like a carnival game – you have to knock down three cans to get the top-shelf prize,” said Andy Tasnady of Tasnady Associates in Port Washington, New York, in an interview.
“Overall, the [wirehouse] plans are getting more complex, especially around deferred bonuses,” Tasnady explained. “There are sharply designed combinations for shaping awards and associated behaviors – with lots of curves and combinations.”
In general, the core pay grids are not being tweaked very much, he notes.
In the case of Wells Fargo Advisors, major changes to its core grid took place in 2014, when three pay “hurdles” were introduced. Advisors are paid 22% of the first $11,500, $12,500 or $13,250 of fees and commissions they earn each month; once they have topped these hurdles — which are based on performance, client experience and growth — the FAs get 50% payouts.
New for 2015 are adjustments to the hurdles. Advisors can lower the 22% compensation hurdle they have to jump over by achieving other objectives, such as revenue growth of 15% or $150,000.
Also, advisors can boost their client-experience results by having 60% of client assets in fee-based advisory accounts or 80% of their monthly fees and commissions tied to fee-based advisory accounts. In addition, lending credits of $6,000 and up will give them higher client-experience results.