We recently hosted a webinar titled: Leveraging Data For Compensation in LPL Bank and Credit Union Programs. With an excellent panel of experts, we discussed best practices with leveraging data for advisor compensation, including the following topics: 

  • A look at key trends in advisor compensation planning.
  • How technology can boost back-office efficiency and productivity.
  • A panel discussion on the impact of the pandemic and how firms are adapting.

In part 1 of our webinar recap, we look at current advisor compensation trends presented by Peter Bielan, from Kehrer Bielan Research & Consulting, and how you can sustain a competitive advantage by adopting these trends.

In this segment, we looked at three areas and how data plays a significant role in each: the expansion of the advisor role, the rise of advisor teams, and how to transition retiring advisors.

The Expansion of the Advisor Role

More firms are moving away from only using a single role for advisors. Firms are adding new advisor roles, including associate, lead advisor, and book-based advisors (aka “second-story advisors”). But it’s essential to measure and compensate for each role accordingly. The firms that excel in these areas are able to attract and retain top talent.

The Rise of Advisor Teams

Kehrer Bielan Research & Consulting are big advocates of advisor teams. They recommend a team-based approach because it’s hard to service the client as a single advisor in today’s financial advice industry. For example, a firm might have a lead advisor that has been in the business for a while but isn’t particularly great with financial planning. In this scenario, the firm should bring on an associate advisor with a background in financial planning.

How to Transition Retiring Advisors

Peter shared how firms are struggling with finding a cost-effective approach to compensating advisors during their transition to retirement. He recommends a 3-5 year transition in which the acquiring advisor pays the retiring advisor in return for that book, while the firm is not in the middle of that financial transaction.

As firms strive to remain competitive and adopt these new trends, not only do they need data, they need tools to leverage data. Not having access to the right data or the right tools, are reasons why some firms are slow to implement these modern practices.

 BONUS: A Few Interesting Statistics

  • Over a twenty-year career, the average cumulative production of a bank-based advisor is $12 Million.
  • The optimum number of an advisor book is between 200-400 clients.
  • $100-175 Million is the optimum territory size in branch deposits.
  • The average grid for an independent advisor is 7% higher than a branch-based advisor.
Wrap Up

Watch for part 2 of our webinar recap featuring key takeaways from our panel discussion. If you weren’t able to attend but would like to view the recording, you can sign up to watch the recording by clicking below.