You’re not a teller. More to the point, tellers aren’t advisors. But when the banks get bad press, you get lumped in.
As of this writing, hundreds of current and former Big Five bank employees have written to CBC News, alleging use of unethical tactics to meet unreasonable sales goals. Some of the claims are extreme, but they show the risks of a fouled-up reward system.
Advisors are far from immune to production pressure. Last year, at least two bank-owned firms laid off reps who hadn’t reached certain revenue thresholds (one reader called it “corporate Hunger Games”). And if you haven’t encountered surprisingly high AUM targets or been encouraged to consider proprietary product at some point in your career, your colleague probably has.
Yet every financial institution says it puts clients first. They need to demonstrate these claims, as the public and regulators are demanding action. This must involve making it easier to do the job you signed up for — providing unbiased, high-quality advice.
Here are three recommendations.
1. Make advisor incentives client-centric instead of bottom-line focused.
This sounds touchy-feely, but a large institution is doing it: Sun Life announced in March that it will now tie 25% of employee bonuses to client satisfaction. It will be extra work for firms to find and assess suitable metrics, but, done right, such a system will ultimately reduce client complaints while improving asset retention (and advisor morale).
2. Make it OK to do nothing.
I’ve heard of non-financial firms making sales reps place a minimum number of calls each day, even if clients don’t need to chat. Some reps call movie theatres and tax hotlines to reach their numbers—not the policy’s intent. Similarly, when you only reward advisor production, you’re not recognizing the times when it was best for the client not to buy a product or service. As CSA’s best-interest consultation paper suggests, firms must find ways to compensate reps for advising against an investment, perhaps by offering base salaries more widely.
3. Require a minimum level of education.
We advocated for an advisor-focused degree in a 2010 editorial, and nothing has changed since. It’s too easy to call yourself an advisor. As one CFP who trains industry hopefuls puts it, “I used to think [poor advice] was [due to] unethical behaviour, but now I realize it is incompetence and extremely low barriers to entry.” Having degree requirements would elevate the industry’s reputation, making your job easier in the long run.
You became an advisor to make people’s lives better, and it’s difficult enough work without perverse incentives stacking the system against you.
You, and the profession you’ve chosen, deserve a system that rewards client-first behaviour over sales and performance numbers. You’ve been under pressure long enough. Now, it’s time to pressure your financial institution’s leaders to act in your best interests.
Originally published in Advisor's Edge