Are you getting what you pay for?

Mar 10, 2015

The 2015 FA Insight Study of Advisory Firms: People and Pay Is Now Fielding

When you’re a small business owner (financial advisor), it can be difficult to find out what your peers are doing, how they are growing, or what they are paying.   Without a doubt, compensation and benchmarking are among the more frequent conversations I have with advisors.  Below is a guest post by Eliza DePardo from FA Insight.eliza_feb2014   Want to know if your compensation is in line with the market?  Want to know how others are providing incentive compensation?   Read below (and participate in the survey).  

According to the FA Insight 2014 People and Pay Compensation Update, advisor compensation increased sharply by 9% in 2013. A further dramatic increase of 10% was expected through 2014 suggesting competition for top advisor talent is intensifying. Additionally FA Insight’s 2013 People and Pay study revealed people-related expenses as a share of total expenses dominated, averaging 75 cents for every dollar in costs. Optimizing your return on human capital has never been more acute.

People practices are a leading indicator of sustainable business success. With this in mind, fielding for the industry’s largest independent benchmarking study, The Annual FA Insight Study of Advisory Firms, is now underway and returns to provide essential guidance in the area of People and Pay.

The FA Insight People and Pay study attracts hundreds of advisory firms each year, delivering advanced guidance for shareholders and executives on how to best organize, compensate, develop and retain talent. This year compensation planning will be front and center featuring all new insight on the use of incentive pay.

Advisory firm shareholders frequently struggle to determine how much to pay and perhaps more importantly, how to pay. Your compensation structure matters, communicating to team members where they must focus to support firm success. Unfortunately, the connection between compensation structure, individual success and firm success escapes many firms.

Debunking Incentive Compensation Myths
At FA Insight we consult directly with some of the industry’s largest and most successful advisory firms. However, the compensation-related challenges experienced by our clients are not unique to large firms. There are many incentive pay myths and misunderstandings to which many firms will relate. For example:
• Incentive pay is just an additional expense that will blow out our total compensation costs.
• Incentive pay will put our firm culture at risk by creating a sales culture or an internally competitive culture that conflicts with the desires of the shareholders.
• Incentive pay is only useful for advisory positions and does not apply to the other positions in our firm.

FA Insight’s Top Five Incentive Pay Guidelines
All of these misunderstandings are reasonable; however, all can be sidestepped with the right compensation structure. For firms that seek to implement incentive pay the right way, FA Insight offers up the following five guidelines:
• Incentive pay must be tied to individual performance objectives that will support firm-wide performance. Without a link between individual performance and reward, the incentive plan is futile.
• Incentive pay must reward for above-and-beyond performance only—i.e., incentive pay should reward for efforts beyond baseline role expectations.
• Incentive pay will not motivate unmotivated, disinterested or uninspired team members, but it will provide talented individuals with further opportunity to shine and be recognized.
• Performance management, including regular measurement and tracking, is a necessary component of any successful incentive pay plan.
• A firm’s strategic priorities should serve as the foundation for setting individual performance objectives. Team members should be rewarded for contributions that advance the firm’s strategic plan.

Your Data Generates Fresh Insight
This year’s FA Insight People and Pay study report will provide participants with current compensation data for more than 30 common industry positions. Perhaps more importantly, FA Insight will guide firms through a myriad of people management challenges. Practical guidance will be offered for firms of all sizes.

Benefits of Participation
By taking part in the 2015 People and Pay study, all participating firms will gain immediate and exclusive access to The FA Insight Study Benchmarking Tool. With the tool, users can benchmark their firm’s financial and operating performance relative to various peer groups. Additionally, participants will also receive a complimentary copy of the People and Pay study report with accompanying data when it becomes available in late Summer 2015. The report will include practical analysis as well as invaluable data for benchmarking the performance of your firm and the compensation of your staff.

Advisors have until March 27th to submit survey data for their firms. Firms interested in participating can visit Be sure to input the “SEI” group code in the Contact Details page of the survey when prompted. This will enable FA Insight to provide SEI with aggregate benchmarking results specific to its advisors.

The opinions and views expressed herein by Eliza DePardo of FA Insight. SEI bears no responsibility for their accuracy. FA Insight is not affiliated with SEI or its subsidiaries.


John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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