Originally published in Financial Planning

By Yvonne Kanner

Compensation is a hot topic in the wealth management world these days. A week doesn’t go by without meeting an advisor who’s amending a company’s plan or thinking about it.

Sure, it’s common to make changes: In practice a company wants to match remuneration to incentives and long-term goals. That, however, is not what is happening. Many times, compensation is reformulated when employees leave, threaten to leave or partners squabble.

Compensation shouldn’t be crisis management.

Instead, wealth management firms should develop broad talent and compensation strategies relevant to their goals. The next generation needs to know they have a future, one with a clear path toward leadership and ownership.

Unfortunately, most firms have not had the time to develop broad strategies and have defaulted to secretive end-of-year subjective processes for assessing compensation. In many firms, employees tell us that they don’t know how compensation, bonus, and equity decisions were made. In most instances, they view the partners’ decisions as subjective and divorced from employees’ responsibilities, contribution or work product.

A symptom of this is a lack of talent strategy discipline at wealth management firms. Only 29% of advisors, according to one report, have a clear succession plan.

Read the full article at https://www.financial-planning.com/opinion/compensation-shouldnt-be-crisis-management

Yvonne Kanner is President and COO of Fiduciary Network, which provides capital to registered investment advisors.