Bank advisor compensation has evolved over the years to more closely match the model used by most brokerages that is based on a rolling average of production over several months, according to a new study by Kehrer Saltzman & Associates.
When the study originated in 1997 by legacy group Kenneth Kehrer Associates, more than half the banks surveyed paid their advisors on only the current month's production.
"At that time, none of the banks used a rolling average of recent production," said Peter Bielan, a principal of Kehrer Saltzman, in a press release. "But today, over half the firms surveyed compute advisor compensation based on their production over the last six or 12 months."
Ken Kehrer noted that banks are also using more discretionary bonuses and scorecards that include factors beyond production. The study is based on a review of 22 bank investment units, which account for 40% of all advisors in banks or credit union, according to the press release.
Kehrer Saltzman was not available for comment.