Credit unions looking to recruit advisors might want to try something thats becoming increasingly prevalent among banks: they should offer separate pay plans for junior and senior advisors and those who work in teams.
In a recent study, research firm Kehrer Bielan Research & Consulting found that financial institutions that offered multiple plans had a much easier time recruiting talent. Among credit unions with multiple pay plans, only one in three had trouble recruiting advisors, according to the research. Among those with a single pay plan, almost twice as many 63% found recruiting difficult.
While multiple pay plans are more common in banks, credit unions are beginning to implement them too, said Peter Bielan, a principal of Kehrer Bielan. Multiple pay plans, he said, make institutions "more attractive to a larger potential group of advisors that may be looking for something specific that a separate plan offers."
Paul Werlin, president of Human Capital Resources, a recruiting firm in Largo, Fla., agreed, noting that financial institutions should take a flexible approach that goes beyond the three or so plans the research suggests. "Having A, B and C is certainly better than just having A," he said. "What's really better is having A through Z and customizing an incentive plan or a recruiting package that makes sense for that particular advisor."
One of the most common additional pay plans beyond a core pay plan is a "senior advisor plan" geared toward top producers, Bielan said. This type of plan might offer senior advisors a higher grid or a bigger draw or salary. It might also pay more for advisory business or offer other incentives for meeting financial planning goals.
Credit unions are more likely to develop a senior advisor plan to help motivate existing advisors to get to the next level, rather than as tool to attract new advisors, Bielan noted.
Another additional pay plan that seems to be gaining traction targets lower-level junior or associate advisors with little or no experience. These individuals are paid a modest base salary and receive a cut of the revenue that the senior advisor he or she partners with produces, usually 10%, according to Bielan.
More financial institutions, banks in particular, are opening associate advisor positions as competition for experienced advisors intensifies, Bielan said. In addition to being able to dip into a much larger pool of potential candidates, financial institutions can recruit people at a lower cost and grow and train them within the institution's culture.
Apart from offering separate pay plans for different categories of advisors, credit unions can play with other aspects of their comp plans, according to the report. Computing an advisor's compensation based on an advisor's production in the most recent month, for example, makes it easier to recruit than computing it based on an advisor's production over the past year.
Other attractive pay features that help lure advisors include incentives for advisory business and life insurance sales. Setting the threshold at which advisors receive a 40% payout at $50,000 or less also helps somewhat in recruiting, though less so than offering incentives for certain types of business, according to the report.
Pay features that didn't make a difference? Offering advisors a base salary or a draw. Whether a financial institution paid a draw or a base salary had little impact on recruiting, the research found.
Rick Rummage, founder and CEO of recruiting and consulting firm the Rummage Group, offered his view of what made comp plans attractive to advisors. "The best compensation plans for banks and credit unions offer a grid that goes up as the advisor's production goes up," he said, noting that payouts typically start at 30% and go up to 50%. On top of that, competitive institutions offer "a growth bonus award" for advisors that beat their historical growth rate, Rummage added.
But the real clincher for many recruits is much simpler, according to Rummage. "The first thing advisors want in a credit union is referrals and access to the customer base. That's the first thing they want. If they don't get a lot of referrals and/or they're not allowed to reach out to the customers on their own to set an appointment, well then that's the kiss of death," he said.
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