A few weeks ago, we hosted a webinar titled: Leveraging Data For Compensation in LPL Bank and Credit Union Programs. We brought together a group of seasoned leaders to discuss advisor compensation best practices.

Terrapin Technologies President, Kristefor Lysne, moderated the discussion and was joined by:

  • Peter Bielan, Principal, Kehrer Bielan Research & Consulting
  • Peg Gaston, Investment & Planning Services Manager, ESL Investment Services
  • Warren Bausert, Program Manager, Sterling National Bank
  • Russell Hanscom, VP/Program Manager, TruMark Financial Investor Services

In part 2 of our webinar recap, we look at how the COVID-19 pandemic has impacted firms and how they’re adapting. Read on to learn key takeaways.

The Impact of the COVID-19 Pandemic

We opened the discussion by asking the panelists to share the current state of their business and whether they have adjusted advisor compensation plans due to the pandemic. All firms have been affected by the market slowdown as a result of the pandemic. The majority of firms are behind year-to-date revenue goals, anywhere from 17-30% off plan. However, some shared how year-over-year numbers aren’t as bad, and in fact, advisory business remains strong.

Branch Traffic

It should come as no surprise that the pandemic has directly contributed to a drop in branch traffic. Which, in turn, has caused a slump in branch referrals and ultimately impacted revenue numbers. It was also pointed out that decreasing branch traffic isn’t a new problem, rather the pandemic has exacerbated it.

Advisory Business Remains Strong

Programs with more advisory business are weathering the pandemic better than those who have a more transactional business. While advisory business plays a larger role now more than ever, some programs are further along with implementing significant changes compared to others. Some firms have only made small steps in that direction – but the panelists all agree on the importance of increasing the amount of income from managed revenue.

Making Changes

Interesting to note that none of the panelists made changes to 2020 advisor compensation plans in response to the pandemic. However, when asked whether they will make changes in 2021, the response was mixed. Some will make changes in response to the slowdown due to the pandemic, particularly those on a trailing 12-month lookback for commissions. Others are going to make changes, but not necessarily as a result of the market downturn. Instead, the changes involve things like a broader focus on financial plans or increasing the payout on advisory business.

Adapting to the Current Landscape

The panelists shared various strategies and best practices they have found useful in adapting to the current landscape.

  • Collaboration with the Bank. Find ways to work with the bank to boost traffic and referrals. One of the panelists shared how the wealth program collaborated with the bank by building a campaign focused on clients with CDs that matured.
  • Leveraging Technology. By now, much has been written on the merits of virtual meetings. Regardless, it bears mentioning it here. Our panelists universally agreed on the power and importance of leveraging technology and virtual meetings between advisors and their clients.
  • Less Travel, More Office Time. A benefit of the COVID-related quarantining (self-imposed or otherwise) is that advisors are spending less time traveling to meetings. By leveraging virtual meetings, some advisors have nearly doubled their number of appointments per day. There’s also the added benefit of forgoing spending hours on end sitting in traffic.
  • Focus On Advisory Business. As covered above, those firms with the most managed assets are outperforming the rest. Research from Kehrer Bielan Research and Consulting shows that firms with 50-60% in managed revenue are doing the best since that income is essentially untouched. These firms can, in turn, build on that and fill in the commission-based gaps where necessary.

Wrap Up

In case you missed it, check out part 1 of our webinar recap featuring key insights on advisor compensation trends present by Peter Bielan. If you weren’t able to attend but would like to watch the on-demand webinar, you can sign up by clicking below.