A challenge faced by many financial advice firms… The target market is clearly defined, the value proposition is carefully constructed and articulated and a suite of marketing supports are developed to help the team of advisers go out and attract a cohort of new clients. And then…nothing.
Well not quite nothing, but not the results that are being sought by the principals. Instead the advisers continue to work as they always did, going after business as they always did. Hitting their sales numbers (maybe) but not in the way that the firm wants it done – that is building up strong and durable relationships with clients in the chosen market segments, adding real long term value to the business.
This is quite a common occurrence, one I’ve come across in a number of firms, so why does it happen?
The goals are all wrong
This is where the problems usually start… Often the adviser goals are quite poorly constructed and actually are not aligned at all to the goals of the organisation. The principals might be clear about what they want to achieve and have Key Performance Indicators (KPIs) to help them track their progress. But unless they link the individual adviser goals to these KPIs, they really have little hope of them being delivered by the adviser. At the end of the day, the more aligned the goals of the adviser are with those of the organisation, the more likely those KPIs will be achieved.
The focus is only on the numbers
When you are trying to influence advisers to change the way they carry out their daily roles, you are actually trying to change their behaviours in their day-to-day activities of finding and targeting prospects, delivering advice and providing ongoing service to clients. But often, the behaviours receive scant attention as the year goes on; the focus tends to be always on the numbers. While the numbers are of course critical, it is the behaviours that actually impact them. It is so important to set expectations around behaviours, to monitor them and to measure them. If they are not being achieved, there needs to be interventions such as training, reinforcement of expectations, encouragement or sometimes good old fashioned pressure to deliver the required behaviours!
Rewards must be aligned with the KPIs
At the end of the day, money drives behaviours for a lot of people, and in my experience this particularly applies to salespeople! They work at the sharp end of the industry, in a role in which it’s pretty nigh impossible to hide, as results are clear for all to see. For this, they expect to be well rewarded.
But if their remuneration is based solely on their overall sales result, well that is where their focus will be. In this situation they will likely pay little attention to;
- Those all-important behaviours
- The quality of advice given
- Product mix
- Client retention
So what should goals and rewards look like?
The key is alignment between the KPIs of the organisation and the individual goals of your advisers. Obviously income generation will be a significant part of this, as this is going to be a goal of both the organisation and the individual. However, the level of “credit” that is given to advisers may be adjusted to take account of;
- Are the new clients signed up by the adviser in the stated chosen market segments of the business?
- The “shape” of the income – the level of upfront commission / ongoing income (i.e. trail) taken
- An adjustment may be made to reflect the retention of business written by each adviser
- Overall satisfaction levels of each adviser’s clients (this is surprisingly easy to measure).
One of the biggest challenges facing advice businesses is encouraging the individual advisers to work towards building up long-term value in the business. This is a big ask if their goals and rewards are based only on short terms factors. If you really want your advice team to play their part in building up value in your business, are you willing to reward them for doing so through long term incentive schemes or indeed through a route to a share of ownership in your business? Because at the end of the day, this is what it may take to really get them aligned with your objectives.
Do you use any particularly innovative methods to reward your advisers? If so, I’d be very grateful if you would leave a comment below.