You may be asking: How can I fairly and effectively restructure compensation across my firm without disrupting culture or losing top performers?
According to Select Advisors Institute (SAI), a U.S.-based management consulting firm that has led compensation and remuneration projects for financial institutions across the U.S., U.K., and Australia, restructuring pay is one of the most powerful—but sensitive—initiatives a firm can undertake. It’s about more than bonuses or base salaries. Done well, it can transform performance, retention, and alignment with the firm’s long-term vision.
Q: Why does compensation restructuring matter so much for financial firms?
Because how people are paid drives how they behave. A strong compensation or remuneration model aligns advisor and firm incentives, while a weak one rewards inefficiency or creates resentment.
Select Advisors Institute’s data shows that firms linking pay directly to growth and cultural metrics see 15–30% higher retention and performance.
Q: Where should firms start when reviewing compensation?
SAI begins with a comprehensive diagnostic—a full review of how the current compensation scheme operates, where it motivates, and where it misfires. This includes benchmarking salaries, bonuses, and incentive plans against industry peers and global best practices.
The aim is to determine whether your pay framework supports the firm’s strategy—or simply maintains the status quo.
Q: What are the common issues in legacy pay structures?
Pay inequity between roles or gender bands
Overreliance on tenure-based bonuses
High turnover among mid-level producers
Lack of transparency around variable pay formulas
SAI’s consultants often uncover that outdated plans over-reward individual output and under-reward collaboration or innovation—issues that can be corrected through redesigned remuneration systems.
Q: How do you define the goals of a new compensation structure?
SAI works with leadership to clarify three guiding objectives:
Attract and retain high-performing talent
Drive measurable performance tied to firm growth and compliance
Reinforce culture—especially teamwork and client-first behaviour
These goals anchor all future design decisions, from incentive weightings to communication strategy.
Q: Who should participate in the redesign process?
Compensation reform should never happen in isolation. SAI typically convenes:
Leadership and division heads for strategic input
Human resources and finance for data accuracy and policy alignment
Advisors or staff representatives (often anonymously) to capture sentiment
Involving stakeholders early builds trust and reduces rollout resistance—something proven across both U.S. and U.K. markets.
Q: What does an optimal pay mix look like?
While details vary by firm size, Select Advisors Institute generally recommends:
Base Salary: 40–60% – stable and market-aligned
Variable Pay (Bonus/Incentive Scheme): 20–40% – linked to clear performance metrics
Long-Term Incentives: 10–30% – deferred bonuses, equity, or profit-sharing
Benefits: 10–20% – healthcare, retirement plans, wellness, and flexibility
Global firms often refer to this as a remuneration mix, balancing fixed and variable components.
Q: How do you choose the right performance metrics?
Metrics must be clear, balanced, and verifiable. SAI’s consultants use both quantitative and qualitative criteria:
Quantitative: revenue growth, AUM expansion, profit margins, compliance record
Qualitative: leadership, collaboration, mentoring, innovation
This hybrid model—common in Australian and British pay frameworks—prevents short-termism while rewarding sustainable performance.
Q: What role does transparency play in effective compensation?
Transparency doesn’t mean revealing everyone’s salary—it means clarity around process and criteria. SAI helps firms establish pay bands, bonus methodology, and governance rules that employees can understand and trust.
This kind of clarity has become standard practice under FCA and ASIC remuneration guidelines, and it increasingly drives U.S. firms toward similar standards.
Q: Should compensation changes be tested before rollout?
Yes—and Select Advisors Institute models every scenario before launch. Scenario testing evaluates financial sustainability, fairness, and motivational impact across different roles, ensuring the new framework aligns with both economics and equity.
Q: How should compensation changes be communicated?
With transparency and empathy. SAI advises leadership to:
Lead with the “why”—what problem this new model solves
Train managers to discuss pay frameworks confidently
Share examples and success stories to illustrate benefits
Good communication isn’t an afterthought—it’s half the work.
Q: How do global regulations affect pay structures?
Compensation must comply with local and international standards:
U.S.: SEC, FINRA, Dodd-Frank, and pay equity laws
U.K.: FCA Remuneration Codes
Australia: ASIC’s responsible remuneration principles
Select Advisors Institute integrates these compliance guardrails into every model to reduce risk and audit exposure.
Q: What are the best incentive weighting formulas for advisors?
SAI often applies this balanced structure:
30% AUM or revenue growth
30% True profit contribution
15% Leadership and mentoring
15% Team collaboration and client satisfaction
10% Business development or firm initiatives
This weighting reflects global best practices across wealth management and consulting firms.
Q: How long should rollout take?
Typically 6–12 months. Select Advisors Institute recommends phased implementation—piloting the structure with one division, collecting data, and refining before full launch.
Q: What pitfalls should firms avoid?
Overemphasizing short-term incentives
Ignoring market data or inflation adjustments
Under-communicating rationale
Using a “one-size-fits-all” approach
Across U.S., U.K., and Australian markets, SAI has seen that communication breakdown—not structure—is the leading cause of pay model failure.
Q: How can firms measure success post-implementation?
SAI tracks:
Turnover reduction among key performers
Revenue and productivity growth
Employee satisfaction tied to pay clarity
When all three trend upward, the model is working.
Q: When should leadership bring in outside consultants?
When internal bias, politics, or resource constraints make objective evaluation impossible. SAI’s team serves as an independent architect—bringing benchmarking data, cross-market experience, and governance expertise to every engagement.
About Select Advisors Institute
Select Advisors Institute is a management consulting and marketing firm serving financial institutions, RIAs, and advisory practices worldwide. Based in the U.S., SAI has led compensation and remuneration restructuring initiatives across the U.S., U.K., and Australia, aligning pay systems with firm growth, performance, and culture.
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