Most financial advisory firms make big investments in their teams, but still feel challenged to structure compensation and benefits packages that will both attract and retain talent, according to a new report from the Financial Planning Association and Financial Advisor IQ, a Financial Times news service.
It’s a struggle many of them aren’t winning. Only about a quarter of advisory firm employees are satisfied with their pay, and about a quarter plan to change jobs soon, the study found.
The study found that only 31% of firms thought their compensation plan was highly competitive with those of similarly sized firms, and that number dropped to 22% for their benefits package.
“The war for talent in the advice space gets more cutthroat all the time, both between channels and within them,” Joan Warner, managing editor of Financial Advisor IQ, said in a statement.
According to the study, median compensation ranged from $50,000 to $249,000, depending on job function.
Seventy-seven percent of firms offered some form of benefits, but these varied widely.
Sixty percent expected to increase their investment in compensation over the coming year, and 22% said they would increase their investment in benefits.
The report was based on responses to an online survey conducted in February from 694 employees at RIAs, broker-dealers, wirehouses and hybrid RIAs, and included both Financial Planning Association members and nonmembers.
Other Key Findings
Besides compensation, the survey also explored job satisfaction at advisory firms, asked about their hiring and outsourcing plans and looked at their investment in team development.
The study said that even though respondents reported relatively high job satisfaction, discontent existed around compensation and benefits.
Only 26% of respondents said they were very satisfied with their compensation, and just 27% were very satisfied with their benefits packages.
Job satisfaction was closely correlated with the respondent’s role within the organization. Sixty-five percent of chief executives said they were very satisfied with their jobs, while only 22% of support staffers said the same.
Attrition risk remains an issue for firms. More than a quarter of staffers in the survey said they would leave their job in the next 24 months.
The report said the data suggested that management may not fully understand team members’ reasons for leaving, as management and staffers expressed different views on the departures.
Decision makers thought employees quit because they were not a good fit for the job or wanted to change careers. However, staff most often cited compensation as the primary reason for leaving, followed by lack of satisfaction with the work environment.
Hiring was on the agenda within the next 12 month for a majority of respondents in the survey. Fifty-five percent of firms said they would bring on new staff, with RIAs driving most of the activity.
Forty-two percent of firms reported that they outsourced some functions, and would continue to continue to do so, with 38% intending to outsource even more.
The study found that 69% of firms provided their teams financial and other support for professional and personal development. Training and mentoring of new employees, however, was largely informal.
The average firm was found to spend some $15,000 a year on team development. However, most training and mentoring is done informally.
— Check out Morgan Stanley Boosted Gorman’s Pay 25% for 2014 on ThinkAdvisor.