Developing a Compensation Strategy in a Financial Advisory Firm

Pomering, Rebecca
September 2001
Journal of Financial Planning;Sep2001, Vol. 14 Issue 9, p58
Academic Journal
This article focuses on the compensation programs of financial advisory firms in the U.S. according to the 2001 Financial Planning Association's Compensation & Staffing Study. Among the compensation strategies employed by advisory firms, the most common was to pay competitively so as to hire and keep the staff needed to run the business. Others indicated that they minimize their base pay and maximize incentive pay. In terms of factors determining compensation, the study overwhelmingly indicated that performance serves as the basis for the majority of firms. However, such philosophy is not fully supported by pay practices. While it is certainly true in commission-based compensation, it did not apply to bonus compensation. In the majority of firms, bonuses were said to be discretionary, not performance based.


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