The Dawson Partnership 2015 Financial Planning Remuneration Trends Survey

From
Sally Humphris

Sally Humphris

The Dawson Partnership Remuneration Trends Survey canvasses a broad range of institutional and independently owned financial planning companies that are surveyed at the end of each financial year. One of the most notable results from the 2015 survey was the increase of 10% over the 2014 year in employer intentions to increase employee remuneration.

‘The 2015 Survey recorded an increased emphasis on employers ensuring that they’re offering market based remuneration with respondents wanting to reward employees who had performed well and also they believed that recruitment activity had increased in the first six months of the year and that they were aware that their best employees were being approached by competitors. Recruitment activity and a trend in remuneration increases were most notable in compliance/governance roles within advice businesses.’ Sally Humphris

The increase in recruitment activity reported by respondents is supported by our 2015 Hiring Intentions Survey which reported an increase in recruitment intentions by employers when they were interviewed in December 2014. The industry wide survey reported an increase of 8%, over the 2014 year and reflected the upswing in positive sentiment.

The primary reason given for the increase in remuneration by respondents was that their employees had met, or exceeded, their expectations and they wanted to reward them accordingly. Additionally, employers were aware that some of their best employees had been approached about other roles and that the remuneration increase was part of their employee retention strategy.

Specifically, in the aligned financial planner business model, an increase in remuneration (including bonuses) was sited principally from a growth in total funds under advice driven by the acquisition of individual financial planner practices, boosting remuneration in compliance and administration roles.

Those holding client service/ administration roles also fared well with increases in the range of 3-6%.

While salaried financial planners employed by institutions received at best CPI increases those employed by independent firms fared better, particularly those who contributed to the firm’s revenue growth with increases upward of 4%.

There was also an element of employers playing catch up where there was provision for employees who were identified as being paid below market or who had some stage during the year taken on additional responsibilities and there had been no adjustment to their remuneration. At the upper end these employees received increases in the range of 6%-10%.

Remuneration Trends Survey Results:

The Dawson Partnership 2014 survey found that:

  • 13% of employers were looking to increase employee remuneration
  • 71% of employers were looking at maintaining employee remuneration
  • 11% of employers were looking to decrease employee remuneration
  • 5% of employers were unsure

The Dawson Partnership 2015 survey found that:

  • 23% of employers were looking to increase employee remuneration
  • 66% of employers were looking at maintaining employee remuneration
  • 5% of employers were looking to decrease employee remuneration
  • 6% of employers were unsure.

Increasing existing employee remuneration:

Of those businesses in the 2015 survey that indicated their intention was to increase remuneration:

  • 55% stated that the increase would be awarded to those employees who had met or exceeded their KPI’s
  • 31% stated that the increase was primarily targeted at valued employees as a part of a retention strategy
  • 14% stated that the increase was targeted at those employees that weren’t being paid market remuneration

Maintaining existing employee remuneration:

Of the 66% of respondents who stated that they would maintain employee numbers:

  • 67% said they would do so to meet current and projected business targets and currently didn’t see there would be any change in their position in the 2015 year. However when asked if they would consider increasing remuneration levels if business conditions did improve beyond their current expectations 27% stated that they would consider it but only if they believed the improvement was sustainable.
  • 33% stated that they were adopting a cautious approach to expenditure even though their businesses were experiencing increased business growth. 10% of these respondents expected this business growth to come from new and lower cost technology increasing productivity.

Decreasing employee remuneration

The 5% of respondents looking to decrease employee remuneration stated that this would be achieved by implementing cost reduction strategies including not replacing employees who leave their businesses and or replacing employees on lower level remuneration

Positive factors cited by respondents:

  1. The improvement client sentiment
  2. The growth in business profitability
  3. Technology benefits with efficiency gains from compliance and reporting

Negative factors cited by respondents:

  1. Continued volatility in investment markets and the flow on affect to sentiment
  2. Further government changes to the legislative framework

‘We noted not only a positive change in sentiment of respondents in the 2015 Survey, but that there is more emphasis on remuneration being viewed as an employee retention strategy. While there isn’t a war for talent as was evidenced in the lead up to the GFC we are seeing an upward trend in recruitment activity and an awareness by financial planning businesses that to retain their employees they need ensure they are remunerated in line with the market or they will face the possibility of losing them’. Peter Dawson

Click here to read about the The Dawson Partnership 2015 Hiring Intentions Survey results.

 

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