The wealth management sector has seen huge changes across the board in the past 6 years; the way in which fees are charged, qualifications and regulation changes. As a specialist Wealth Management Recruitment firm we have seen wholesale changes in how advisers are remunerated.
These changes have been put in place for several reasons, and depending on whom you speak to in a firm you may get a different answer. Business owners and directors tell us they are attempting to give their advisers the opportunity to earn more, whereas advisers often feel the change is their firm taking a bigger slice of the business they bring in. Less frequent reasons include increased regulations, new owners changing payment structures or firms looking to ensure client banks are not portable.
Whatever your situation though, you need to make sure you secure a remuneration package that works for you and your personal situation, in exactly the way you would recommend products and risk strategies that might suit one of your clients.
Employed plus Structured Bonus:
An employed contract is a traditional form of employment contract – you will receive a basic salary with a standard benefits package, but the structured bonus is the lucrative element of this form of employment. Typically, you would have to validate your salary anywhere from 1 to 4 times depending on the firm and then would receive a structured bonus on the fees you bring in. One of the best offerings we have seen on the market for this is a 2 times salary validation and a tiered 50% and 65% bonus on fees produced above this amount. Qualified advisers can typically expect to secure a basic salary of £40k – £80k in London, with a slightly lower average outside of London, typically at £30k – £80k. Total remuneration is dependent on your billings.
Advisers seeking the security of a guaranteed basic salary with the potential for a lucrative bonus.
Advisers looking to secure unrestricted ownership of clients or advisers seeking a larger than an average of 30% – 40% take home figure of total fees produced.
Employed plus Discretionary Bonus:
Again, this employment comes with a guaranteed basic salary and benefits package, but unlike the structured bonus, a discretionary bonus is given at the discretion of the management team or board of directors. The main criticism of this type of remuneration is that it does not provide a tangible link to your performance and your bonus. A firm may have underperformed and bonuses may be low compared to market averages. A firm may need extra funds to invest in future growth or infrastructure and withhold bonus payments. We typically see larger more established firms offering such remuneration packages and this may be because they can offer ready-made client books or legacy clients for advisers. Qualified advisers can typically expect to secure a basic salary of £40k – £80k in London, with a slightly lower average outside of London typically at £30k – £80k. Here total remuneration is not dependent on your performance or billings, and in the worst case scenario could mean no bonus whatsoever.
Advisers seeking the security of a basic salary or advisers that prefer the technical act of financial planning and not the sales & networking side.
Advisers with existing client books to bring or advisers seeking a meritocratic environment offering a tangible link to their performance and bonus.
Self-employed is a broad term and in the wealth management market can come in many different forms. A purely 100% self-employed role will actually mean you may be either totally out on your own or in a 100% commission focused role. A more common self-employed role will see you taking home a higher percentage of your total billings but will not give you the security of a basic salary and benefits. There can be a number of variations in how this is formatted, but typically they take two forms; a percentage of the fees produced (fixed or variable) or an overhead charge plus a percentage of the fees produced. This is to cover overheads for support staff, technology and other general overheads. The two best offerings we see here are 60% – 70% of total fees or a £700 per month overhead charge with a staggered percentage up to 90% of your fees.
Advisers with an existing client bank looking to maximise their total take home from their fees. Advisers should be taking home 50% – 85% of their annual fees.
Advisers with no existing clients may be left covering an overhead charge and with minimal to no salary.
How are you remunerated and would you like to find out what would suit you best? Are you worried your current package is not as strong as other firms?
For a private conversation to put your mind at ease please contact the Financial Divisions team on 0207 397 5544.