Remuneration: adjustments in view

In 2022, the Quebec average of the scores on the compensation offered by brokers remained stable, at 8.4 out of 10, compared to 2021. The importance was also high in 2022, at 9, 2. This year, the Quebec average for bonuses and other compensation benefits is 7.5, while it was 8.0 in 2021. The importance for this element is slightly higher in 2022.

For most brokers, the score for total compensation is stable or slightly in 2021 compared to 2022. However, in IG Wealth Management and Quadrus Investment Services, it has increased significantly from 2021 to 2022, going from 7.3 to 8 ,1 and from 2021 to 2022. 6.9 to 7.5 respectively.

At IG, a large majority of respondents are satisfied with compensation. “The grid is well made to integrate young advisors,” said a respondent from this firm. “These are good changes to our compensation. In general, there is compensation for planning work,” notes another. “I am aware that there is a cost to be able to consult specialists for my clients and that it will affect my remuneration”, adds a third.

However, certain internal policies create dissatisfaction. An adviser also complains about the adjustment, in January 2020, by which the advisers’ commissions are calculated on the new net assets paid into the accounts of a client, while before they were calculated on the sale of large funds. Another judge that “the compensation is discriminatory because it is based on the assets of the council and not on the number of clients.”

Compensation at IG varies based on an Advisor’s assets under management, productivity and customer service. “We are trying to have a competitive model in the industry, which will take into account productivity, but also the block of business,” explains Carl Thibeault, senior vice president, Quebec, of the company.

A recent change in measuring customer satisfaction related to compensation appeals to a respondent. According to him, an overly strict evaluation criterion has been relaxed. “Until 2021, an advisor had to score 5 out of 5 for at least half of the respondents to a customer survey on the appreciation of the advisor,” he says. Reaching this threshold allowed access to an enriched salary grid, “the same grid that before the introduction of this whole system, without more… which allows you to avoid seeing your remuneration decrease considerably”.

This satisfaction survey will become a coaching tool, less restrictive in terms of remuneration, points out Carl Thibeault: “Customer satisfaction is part of remuneration, but perhaps in a less direct way or for which the sample may be too small . »

In 2022, Quadrus advisors are also divided on their compensation. Some talk about improving their grid, while others complain about a reduction in theirs (read “Uncomfortable transition”). It is difficult to know what would have changed, especially since Quadrus indicates in an email that the remuneration of advisers has not been modified in 2022.

Business model question

Perceptions of compensation seem to vary not only by the experience of the questioner and the block of business, but also by the business model of the broker, our survey shows. In most brokerage firms, the advisor is more of a self-employed person or entrepreneur. It therefore receives a large portion of the gross income it generates (payment), but must pay more fees than a commission-based advisor.

“U payment is high compared to the competition. You can earn more, but business development support is minimal. That’s the trade-off to make,” summed up a respondent from Manulife Securities.

In most companies, some respondents thought they could get more by going elsewhere. On the other hand, a segment of respondents such as the proportion of commissions on the revenue generated (payment missed), but complain about the bill they receive from their broker for their services.

Other advisors rate the services received from their broker. “The support we have is worth its weight in gold, focusing on our business rather than spending hours in administration, spending hours in administration, revenues have increased as a result,” says a consultant of financial services companies MICA.

Also, in general, the pay scale should be a balance between favoring larger producers and less experienced advisers. “They can pay less for the 20 to 30% who are less efficient and give more to the best performers,” suggests this expert adviser of Manulife Securities. This opinion contrasts with that of this respondent at the beginning of his career from Sun Life Financial (SLF): “I am angry about the changes in compensation. The company gives bonuses to great producers. The income is taken from average advisers. We are driven to work like crazy.”

In addition, the SLF has recently revised its compensation program, which will take effect in the spring of 2023. At this broker, the rating goes from 7.3 to 7.1 from 2021 to 2022 for the general compensation. Many respondents talk about negative changes to come, such as a drop in the rate of payment. One of them fears a reduction of his by 5 percentage points.

Regarding insurance, the adjustments made over the years are not pleasant, as this respondent from the SLF said: “For many years, we have been made to pay more and more things and the system of commission level falling slowly. In 2010, the average renewal commission was 12% and now we should be at 8%.”

The SLF did not confirm the nature of the changes or the advisers’ claims, but said in an email that it continuously evaluates compensation “to have a fair, transparent and client-based system.”

“At Sun Life, we recently revised our compensation program to make it more beneficial for advisors and clients. Additionally, recent revisions to our commission program better align compensation with sustainable business growth for our advisors. They also allow advisors to better understand their compensation and its link to their actions,” writes Rowena Chan, president, Sun Life Financial Distributors (Canada) and senior vice president, Distribution and Insurance Solutions.

In Investia Financial Services, the changes to the compensation grid were announced and a group of respondents considered them favorable.

One respondent mentions the addition of annual administrative fees of $50 from June 2022. For advisers who hold accounts on behalf of the client, these are the new fees. For self-directed account holders who already pay an annual fee of $100, this fee will not apply until 2024 and will replace the current $100. However, Investia will not add postage and will remove others such as account transfer, real estate processing and NSF control.

These new fees seem confusing, as one respondent says that it is annoying that the representative has to pay the fees for customers who do not have. “Advisor free to pay. And no, if a client does not pay the fees, we do not go after the advisor, specifies Louis H. DeConinck, president of Investia. It is up to the advisor or client if they get what they pay. »

Without specifying what compensation changes have been introduced, the manager indicates that Investia pays more to the adviser, but that the firm does not offer a financial planning service or client relationship management software, or a physical office. However, it imposes various technology fees, including back-office and cybersecurity fees.

Furthermore, it was not possible to know precisely the expected changes in SFL Wealth Management. “The transformation of our business model requires adjustments that will be made to compensation. This is part of the work to come, but we want to take the time to do things right,” said André Langlois, Vice President, Sales and Distribution, Independent Networks, at Desjardins Financial Security.

Click on the image below to download a PDF of the 2022 Multidisciplinary Broker Score.

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