That's because in four years, the share of the firm's financial consultant force working on teams has surged from 30% to its current total at 70%, and could continue to grow, Metzger says.
Hilliard's team-based award is just one part of its compensation plan, which also rewards members of the firm's financial consultant force who practice individually. But the strength and growth of its team program speaks to an industry-wide emphasis on teams that has continued to surface on the compensation plans for wealth management firms this year. On Wall Street magazine has once again gathered the new compensation plans for the large wirehouse and regional firms to see what financial advisors can expect from those companies in 2012. And, for the first time, we have also included a new chart from a smaller regional firm, Southwest Securities.
The results may surprise you. With the help of our outside compensation expert Andy Tasnady, we found out which firms came out on top at the $1 million, $600,000, $400,000 and $200,000 production levels.
Of the wirehouse firms, UBS Financial Services held on to the top spot at the $1 million mark, and rose to number one this year at the $600,000 level. Bank of America Merrill Lynch took the top spot at the $400,000 level, while Wells Fargo came in at number one at $200,000.
Of the regional firms, Raymond James & Associates also held on to its top spot at the $1 million mark. Janney Montgomery Scott took number one at the $600,000 level. Stifel Nicolaus and Wedbush Securities held on to their top spots from last year at $400,000 and $200,000 respectively.
But the compensation story this year is so much more than the rankings or the team-based awards. It's also the tweaks that firms make to try to get their financial advisors to reach higher and higher for assets. It's the acquisition of Morgan Keegan that will make the appearance of that firm's compensation grid in our rankings this year its last. And it's all of those changes that will help determine financial advisor loyalty.
It Takes a Team
Hilliard Lyons' team-based plan, called Preferred Partnership, was inspired five years ago when the firm looked what smaller, more nimble wealth management firms were offering, according to Metzger, who also serves as director of private client group administration at the firm.
Today, Louisville, Ky.-based Hilliard's team plan allows for the teams to combine the production from all of their partners and tell the firm each year how they want to divide it.
"Basically, it allows them to go through our financial consultant compensation plan as one unit. Even though there might be four or five people on that, they can make more money," Metzger says. "They can make more money being in the preferred partners versus a stand-alone advisor."
Hilliard's teams can range in size from two financial consultants working with one client service associate to seven financial consultants working with three client service associates. The bigger team would likely be in a growing area for the firm like the Carolinas, Metzger says. Hilliard currently operates predominantly out of Kentucky, Indiana, Ohio and Tennessee.
The team structure allows them to provide different areas of expertise for clients, much like seeking the consultation of a general health practitioner and specialist doctors, Metzger says. This structure ultimately allows for a financial consultant who enjoyed daily portfolio analysis and analytical details to pair up with another financial consultant who leans more toward broad wealth planning and relationship management.
"It's people with different skill sets and different things that they enjoy most about the practice partnering with other team members that leads to greater client satisfaction and really greater advisor satisfaction, as well as overall success for the firm," says Jaleigh White, who joined Hilliard as executive vice president and director of high net worth strategies last July. "It's the case where one plus one does equal three."
The team structure is also aimed at taking the risk off of adding new members. Someone with a very unique set of expertise, but not a lot of clients, can be folded into a team in their first year at one production level. In subsequent years, after they have proven themselves, their take-home pay can go up.
But even as Hilliard has ramped up its emphasis on a team-based approach, sometimes an individual practice still makes the most sense, Metzger says. One of Hilliard's individual financial consultants is a municipal bond expert with 35 years of experience in the industry. His practice, as a result, is more of a niche and more suited to an individual, according to Metzger. "We absolutely value the individual practitioners, financial consultants, but a lot of those individuals have a very niche and narrow practice," Metzger says.