Sometimes, you have to set an example; display some solidarity; share the pain. Which is why it was gratifying to see many high-level Canadian financial services executives recently forgo their bonuses or other compensation, and do so publicly. Naturally, the cynic in me sees it as a publicity stunt. But, even still, it was the right publicity stunt.
Their actions stand in sharp contrast to their neighbours to the south, who have been jawing to the press about how they “deserve that money.” It’s no wonder the president stepped in, or that average Americans hailed Credit Suisse’s move to pass out lumps of illiquid securities to its execs. It seemed so fair, so appropriate.
Now, I’m the last person to accuse investments professionals of not working hard. On January 27th, after we closed our coverage of the federal budget at midnight, I stumbled to the subway and spotted a half doz- en people I know from the industry. They were headed home too, except for them it wasn’t a special occasion. It wasn’t the end of an exceptionally long day to produce a special package. It was, in fact, just another day at the office—part of the routine.
But, deserved or not, the industry has an image problem right now, one that could take years to shrug off. Investors worldwide are clamouring for harsh judgment, especially after some firms staged extravagant corporate retreats and top executives took their families on luxury jaunts in corpo- rate jets after the first round of bailout cash had been doled out.
While most advisors aren’t in such pay grades, the splashing of details about executive compensation on the front pages means your clients are wondering how much you make. And, for many, the only point of refer- ence is what they’ve read. It has infected their minds and turned them against the very people whose help they need right now.
The problem is easily solved, though, with transparency. In actual fact, clients are less concerned about what you make in a given year, and more interested in knowing what you make off of them individually. Which means it’s the time to be clear about your fees, and other details related to how you’re paid. Compensation in our industry is under scrutiny and, as former U.S. Supreme Court justice Louis Brandeis once said, “Sunshine is the best disinfectant.”