Remuneration: changes feared | Finance and Investments

“I have friends who left the network because they were tired. The pay is too low here,” said another.

The latter is not inclined to recommend his signature, because “the remuneration is lower than the median”.

Several factors explain this importance among representatives related to multidisciplinary brokers, starting from their business model. This differs from one firm to another and departs from the model of investment advisors who are legally considered commission-based employees at many full-service brokers.

Thus, in a large part of the companies presented in this table, the part of the generated gross income attributed to the board is greater. In return, you incur more expenses (office costs, computer equipment, costs for financial planning software, etc.). In some cases, you can choose individual services from those offered by your broker or by the subsidiaries of your parent company. In this case, we are talking about an 80-20 model, where, on average, the percentage of commission that accrues to the advisor on his total gross sales, that is, his average payment rate, tends towards 80%.

In 2020, the rate of payment The average of firms in the Multidisciplinary Broker Score was 68% and generally ranged from 70 to 85%, depending on the firm and the advisor. This percentage remains specific to each advisor and changes from one advisor to another within the same firm, depending on gross income generated or assets under administration and the intricacies of a broker’s compensation schedule.

Advisors, who often see themselves as entrepreneurs, already face unstable income due to fluctuating assets under management or their level of insurance sales. He does not appreciate when his broker changes his terms of compensation, because it is too rarely done to his advantage, according to the survey.

Respondents to this tend to give their brokers generally higher ratings when their compensation changes little or not at all. Many advisors have not had recent changes to their compensation. This is the case, among others, in MICA Capital, PEAK Financial Group, Cloutier Investments Group, Excel Private Management, Investia Financial Services and Quadrus Investment Services.

“I’ve been with Investia since 2000 and we’ve never touched the grid,” says Louis H. DeConinck, president of Investia. The grid is modulated according to the assets under the administration of a council, and not according to their gross production. He admits that the merger with FundEx, where the elements of the compensation of the last firm will be adjusted, may have created confusion.

Louis H. DeConinck points out that many of Investia’s technology investments, including electronic signature tools, client and representative portals, and mobile applications, were made at the broker’s expense. “If we make the advisor’s job easier, it frees up time for them to find more assets and generate more income. That’s good for everyone,” he said.

At Quadrus, the lack of change to the compensation grid was well received by advisers. “We have maintained our bonus rates and commission rates for advisors during the pandemic with no intention of reducing them. It has been appreciated. Normally there is an annual grid reset at most brokers. We have maintained the same rates as we had in 2019,” said Tim Prescott, president and CEO of Quadrus Investment Services.

According to him, Quadrus’ compensation is competitive and this lack of change has helped to avoid “making things more difficult for advisers”.

At SFL Wealth Management, compensation scales based on overall collective savings income have not been adjusted recently. SFL plans to revise this grid, as it recently did with its insurance compensation.

At SFL, the insurance bonus grid has been raised, says André Langlois, Senior Vice President, Sales and Distribution, Independent Networks of the Desjardins Group. “In insurance, it is according to the volumes that the upward adjustments have been made in the remuneration grids. Il s’agitée d’être à la hauteur du marché. It was very appreciated.”

However, an SFL councilor said he was disappointed not to have been compensated for training conferences canceled due to the pandemic. “The conferences will be moved and for those that have been cancelled, we are thinking and we will announce adjustments”, answers André Langlois. He points out, however, that virtual business meetings, held every six to nine weeks, have helped advisers share best practices and stay motivated. “These events were greatly appreciated by the intermediaries.”

Less popular measures

At IG Wealth Management, an advisor says they “change their benefits every year.” Another deplores a “decline in compensation over the past four years.”

A few reps are going back on an adjustment of January 2020. So the commissions are calculated based on the new net assets paid in the clients’ accounts, under certain conditions, “while they were previously calculated on gross sales of mutual funds,” according to the MD&A of IGM Financial, IG’s parent company.

According to one respondent, if a client withdraws $30,000 per year from their portfolio for five years and invests $150,000 after selling their home, the advisor will still have zero net sales for this client (-$150,000 + $150,000 = $ 0).

Without denying this difficulty, Claude Paquin, president of IG Wealth Management in Quebec, points out that his company is one of the few in its sector to offer such a bonus on new net assets.

In addition, an IG advisor indicated that he had to achieve random and unchallenging goals to access “enriched compensation grids”. Essentially, it improves the compensation of advisors who, among other things, are well rated by their clients in satisfaction surveys and who have up-to-date financial plans for their clients.

At the end of May, IG relaxed the rules to access this enriched grid to take into account the time needed for the council to familiarize itself with the new software.

In addition, for a period of six months, IG has not paid office or parking fees, specifies Nini Krishnappa, spokesperson of the financial company IGM: “We have also postponed the increase in technological access to a later date late this year.”

At Sun Life Financial Investments, one respondent referred to a recent shift in investing that “disadvantages some and benefits others.” As noted in “Dissatisfaction at Sun Life,” compensation is intended to reward advisors who maintain and grow their market-oriented, revenue-aligned wealth management business. “These changes allow us to be more competitive and offer our advisors great growth opportunities,” said Michel Fortin, Vice-President, Strategic Initiatives and Head of Distribution for Eastern Canada at Sun Life Financial, in a email.

It looks like a succession plan

This year, a few respondents note how difficult it can be for a succession plan to get off the ground. Unless they have acquired a block of business that is already generating regular income or a partnership with a senior advisor, a new representative must be financially sound.

Some firms will support a junior adviser by paying him an advance on his commissions at the beginning, which he may have to pay back if he does not achieve certain goals.

In addition, the variable compensation of 100% creates challenges for some representatives, including one from Sun Life Financial: “I am on a pure commission and sometimes I have negative pay. If I am not at the required sales level, it happens that I do not I don’t have a payment and that next month I have to repay.

An adviser at IG Wealth Management also calls for a reform of the way the compensation grids are constructed, to better suit juniors and seniors: “It is frustrating that an adviser with more assets is paid at a significantly higher rate than that of a council. with fewer assets. The work is not less well done or less important. This promotes the loss of autonomy of the councilors who are not strong enough to take the time to build. They must end up selling their assets to a major board and lose control of their clients who had chosen this board from the beginning.

Download the Scoreboard for multidisciplinary brokers by clicking on this link.

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