When asked about their compensation, only 26% of advisory staffers said they are very satisfied, while just 27% reported the same about their benefits packages. Overall, the report, which was compiled by a number of industry research and advocacy groups, finds advisory firm members are putting pressure on firm owners and equity partners to keep benefits and compensation packages competitive, especially as an increasing number of older advisers leave the field and competition for younger talent heats up. (See “Seeking Out New Talent.”)
“The data highlights a need for the decisionmakers in any firm to ensure they have clear and objective feedback on what is most important for the team,” says Julie Littlechild, president of If Not Now Research and a contributor to the research effort. “This is an area where assumptions may hurt team engagement.”
The financial advice profession is continually evolving to meet clients’ needs, she explains. But advisory firm owners cannot only focus on external client service: attracting experts and retaining satisfied workers is equally important.
The study finds 31% of firms feel their compensation package is highly competitive compared with other firms of their size and focus. That number drops to 22% when analyzing benefits, however. Other results reveal a disconnect between how firm members feel about their compensation and benefits and how they feel about their job in general—as more than three-quarters say they are satisfied with their jobs.
Taking a deeper look into the details of benefits, the statistics show 77% of firms offer some form of employee benefits beyond the paycheck. However, firms differentiating themselves to attract top talent add a broad range of other options beyond the typical health care, retirement planning and group life insurance offerings.
Importantly, the benefits considered most valuable by both decisionmakers and employees were health insurance, 401(k) plans and vacation time. For the approximately 70% of firms offering 401(k) plans, 80% match contributions up to a specified percentage amount, with 17% revealing they match 100% of employee contributions. Beyond these benefits the groups disagreed to a significant extent about the value of sick time, cited by management to be of greater importance, and the chance to earn equity in the firm, being of greater value to staff.
When discussing future plans for benefit offerings, less than a quarter of firms plan on making changes. However, 60% intend to boost compensation levels in the next year. Compensation is most often given as the primary reason non-decisionmakers leave their job, reported by 31%. More than half (55%) of firms plan on hiring within the next 12 months, with a focus on expanding their advisory and client service teams.
Additionally, job satisfaction is closely tied to one’s role within the company. The study found job satisfaction is highest among CEOs at the largest firms. Further, in comparison to all respondents, senior advisers/planners are those most likely to receive additional benefits. Job satisfaction is generally below average among junior financial advisers/planners.
“The war for talent in the advice space gets more cutthroat all the time, both between channels and within them,” explains Joan Warner, managing editor of Financial Advisor IQ, also a contributor-firm to the research. “By drilling down into what really drives team engagement, our study can help firms design compensation plans to attract and retain the [top talent].”
The study is the result of combined efforts from FPA Research and Practice Institute, a program of the Financial Planning Association, and Financial Advisor IQ, a news service of the Financial Times. Results comprise input from 694 U.S. advice professionals and decisionmakers. The survey was conducted online in February 2015 by Julie Littlechild of If Not Now Research.