Large firms already have a name for themselves in the industry. Therefore, they don’t need to design creative compensation strategies to get ideal clients. They typically offer standard benefits with pay grades that don’t budge. In a world now driven by inclusion and showing appreciation to each employee, this type of compensation strategy could hurt large firms in the end: queue boutique wealth management firms and their ability to have a creative edge.
Boutique firms have the advantage of approaching compensation from different avenues. When high-dollar salaries aren’t necessarily an option to fight for the best employees, smaller firms use their creativity and tailor to employees the way they wish to be tailored to by the large firms but are not.
In short, the ball is in the court of the boutique firms.
Creative Compensation Strategies To Incorporate Into Your Hiring Process
According to Knights Bridge Advisors, the idea isn’t to create a compensation package that competes with the way large firms currently run their businesses. Doing so is unwise for a number of reasons:
- Most advisors in the industry are retiring in the next ten years or so.
- They have established clientele.
- They are highly paid and frankly out of budget for small firms.
- Their portability of assets is restricted because of a non-solicitation agreement.
Rather, Knights Bridge Advisors suggests creating a compensation strategy that competes with how large firms plan to conduct business in five years.
A great way to figure out what the top talent wants is to ask them. Once you have a prospective employee in an interview, ask them what kind of compensation plan they prefer and be clear with them that this plan can go well beyond monetary means.
The fact that boutique wealth management firms have so many levers to pull from – where compensation is concerned – is what can give them the upper hand.
Some things top talent may look for include:
- Base salary plus bonuses for first-year revenue
- Stock in the company gradually increases until they reach a cap
- Sign-on bonus
- Schedule and work-location flexibility
- A tailored health care package
- Cryptocurrency compensation
- Etc.
Harvard Business Review states that most other industries, like technology and health industries, offer variable compensation in long-term awards. It serves as a remarkable incentive to retain the employee and for them to work harder to receive more awards.
Mentioning educational opportunities in the compensation strategy even pays to consideration, especially when looking at promising young talent.
The beauty of creative compensation strategies and opening the floor to allow the employee to help create their plan is that it can encompass anything the employee perceives to be compensable.
We want to hear from you. From your experience, what do financial advisors look for in a compensation package, and how can boutique wealth management firms remain competitive?
