Banks and credit unions are paying advisors more for fee-based business, according to a new report from Kehrer Saltzman & Associates.
Nearly two-thirds of the 48 financial institutions surveyed are giving advisors additional incentives for fee-based business, either by putting that business on a separate, more lucrative payout grid or giving advisors a bonus for the business.
Just a few years ago, when looking at incentive plans, it was mainly about the grid payout, Peter Bielan, a principal of Kehrer Saltzman and project director for the study, said in a telephone interview. Now were seeing plans where its more than just the grid amount.
Some banks and credit unions are rewarding their advisors by offering higher grids for fee-based business. Payouts range from 40% to 50%, regardless of how much advisors make in production. Regular grids on all other business range from 26% to 41% and are linked to production levels, Bielan said.
Especially for the lower producers, its a significantly higher payout than theyd [otherwise] get, Bielan said.
Other institutions are adding a certain percentage to the existing grid for fee-based sales, with premiums ranging from 2% to 8%.
If you go from 32 [percent] to 40 [percent], you start to see that, Bielan said. Even at the lower end of the premium scale, the boost to compensation starts to matter, he said, particularly on a decent amount of production.
The study, titled 2013 Financial Advisor Compensation Study, is based on a review of 63 incentive plans from the 48 institutions surveyed.