Remuneration: have you got it right?
2nd September 2016
Remuneration is often a challenge for many intermediary firms principally to get the balance right between paying for results and retaining advisers and staff. The FCA and their predecessors, the FSA, have published guidance – see the article above – but how in practice should you go about setting and monitoring remuneration?
In my experience, there is no “one size fits all” solution but rather it’s important to ensure that the remuneration is affordable, motivates and retains staff – and importantly will re-inforce the right culture and behaviours.
What is also important is to work through the possible outcomes and the impact on the firm and its profitability. Suppose an adviser achieves a significantly higher level of fees than anticipated; what impact on profitability would this have? Also, what level of the firm’s resources did he or she use and was those factored into the level of payments? Also, were the clients ones that the firm is seeking and were the risks arising from the business advised on fully considered?
In summary, it’s important to “stress-test remuneration and accompanying incentive schemes before they are implemented; seeking to alter them later is often challenging and demotivational.