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Succession Resource Group is a boutique succession consulting firm based in the Pacific Northwest, serving clients across the country. SRG was founded by David Grau Jr., MBA in 2012 after nearly a decade of helping advisors with valuation and succession planning. SRG's team of experts leverage their industry expertise, combined with best-in-class resources, to help advisors, agents, and accountants manage the equity in their businesses...

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9 min read

Five Building Blocks of an Attractive Compensation Model

Aug 8, 2022 10:22:37 AM

Hiring and retaining talented employees is a top priority for most business owners. Effectively doing so has become increasingly difficult in the financial services industry. The number of advisors approaching retirement and exiting the industry far outweighs the number of new advisors joining. This gap is further exacerbated by the Great Resignation. As a result, organizations are struggling to find the human capital needed to grow their business and plan their internal succession.  

The companies attracting top talent are successfully promoting a culture with transparency, communication, and flexibility in the work environment. Additionally, they've adopted an attractive compensation and benefits package that rewards employees in both the short-term and long-term for an employee's individual performance and the company’s success. While it is often difficult to narrow down the specifics that create a strong company culture, the building blocks of an attractive compensation plan have become easier to identify based on the recent trend in the industry to move away from a traditional, one-size-fits-all compensation plan, in favor of customized solutions that are tailored to better align company goals with employee needs.

Customized compensation plans are more predictable for both sides of the employment relationship, yet flexible enough to incentivize a variety of desired behaviors. The transparency within this approach further supports a company culture of cohesiveness and growth. This new trend aims at providing a more reliable income source for employees, and more flexibility using an incentive structure that aligns with organizational initiatives.


Young handsome businessman using wooden building blocks with white calculations scribbled around him  

The demand for customized employee solutions may seem to be an overwhelming task. With collaboration and a clear strategy, an organization can begin implementing some of the key elements of an attractive and competitive compensation model.

Consider adopting any of these five elements to strengthen your employee compensation model:

1. Salary - Fixed Component

One of the main recruiting tools to attract talented advisors and create a team as opposed to silos, is to provide more predictability with respect to income. An example of this is in the form of a fixed salary. This fixed salary is not just offered during the first year of employment but rather throughout the employment relationship. Firms that pay their employees solely based on production often appear attractive only to experienced advisors who have their own production and can gauge their income capacity. For less experienced advisors, namely those who do not have an established income source yet, purely production-based pay often results in too many uncertainties.  

Another point to consider is that while production-based pay can be a great incentive tool to maximize an employee’s ability to generate revenue, it often lacks the incentive for employees to focus their time and effort on non-producing activities that may be equally important to build a healthy organization. This includes certain administrative and leadership duties.  For these reasons, many firms decide to integrate a fixed base salary in their compensation model to provide a reliable income source to employees that allows them to focus on internal processes and developments in addition to their duties as an advisor. 

2. Salary - Adjustable Component

Recognizing that there are still some merits to production-based pay, many firms are now adding a second, somewhat variable, component to their advisors’ salary. To ensure that the compensation aligns with the company’s goals to produce revenue and achieve a certain profitability level, employees may receive an additional salary component that is subject to adjustments based on the level of assets they are servicing.  

This compensation component is driven by pre-established asset tiers, with each tier having a corresponding salary amount. Having these tiers allows business owners to easily communicate required performance levels to achieve a certain pay increase. This salary component should be reviewed and adjusted at least annually depending on the level of assets the employee serviced at the time of the review.

3. Bonus Compensation - Individual Performance Incentives

Individual performance bonuses need to be tailored to specific performance goals to ensure that the employee’s job role and compensation align to achieve the desired incentives. Such bonuses should be based on quantifiable performance metrics and aim at results that can be determined immediately or within a short time frame.  

 Examples of such individual performance bonuses include: 

  • Bonuses based on new business brought to the firm in the form of assets, revenue, or new clients 
  • Bonuses for the creation or automation of a service or for the streamlining of processes or departments 

The type of bonus structure a company offers to employees should be influenced by company objectives, its business model, and regulatory requirements. 

4. Bonus Compensation - Company Performance

To encourage employees to focus on the company’s overall success, a company might also offer a bonus that is tied to particular company goals such as revenue or profit growth. This type of bonus is meant to incentivize team members to collaborate more and create efficiencies. However, its usefulness will depend significantly on effectively communicating particular goals and expectations, as well as creating and maintaining a company culture with transparency that supports the achievement of such goals.

Company performance bonuses are typically paid annually after the company’s performance has been determined. To calculate an employee’s eligible bonus amount, the company would either commit a percentage of the profits into a profit pool, which is then distributed to all eligible employees, or pay a percentage of the employee’s salary.

5. Bonus Compensation - Long-Term Performance Incentives

In addition to short-term incentive pay, some companies also offer long-term incentive compensation to select employees. Long-term incentive pay is often provided if the results of activities cannot be quantified right away.  

Examples of long-term goals include:  

  • Implementing new processes or policies 
  • Creating new client resources  
  • Developing marketing content 
  • Ensuring timely client service 
  • Training or mentoring other staff members 

Some time may pass before the employee’s efforts translate into additional value to the company. To ensure that key employees focus their attention on the company’s long-term goals, equity compensation may be offered in the form of real equity or phantom equity depending on the desired outcome. 


The type of compensation plan offered by a company to its employees depends on many factors, including the company’s goals, organizational structure, culture, applicable industry rules and regulations, potential budget constraints, and the conditions in the job market. To ensure all these factors are carefully considered, the compensation plan should be tailored to the company’s specific needs to achieve the intended results. 

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Topics: Compensation
Nicole Frey

Written by Nicole Frey

Nicole Frey is a Project Manager with Succession Resource Group (SRG). She has been with SRG since 2016 and focuses on strategic organizational planning and risk mitigation. Her areas of expertise include mergers and acquisitions, human resources development, death and disability planning, and entity formation and restructuring. Nicole’s goal is to create customized solutions that help business owners achieve their ultimate business objectives.