Milana Pokrajac examines how financial services salaries are regaining ground as firms look to strengthen teams and take advantage of improving market conditions.
Demand for financial planners began to grow in the last quarter of 2009 for the first time since the onset of the global financial crisis — and it continues to rise, with the number of job ads up almost 30 per cent since this time last year.
The increase was largely attributed to returning confidence in the stockmarket. Candidates are in a much better position now than they were a year ago, according to Simon Mortlock, editor of eFinancialCareers for Asia Pacific.
Financial planners with good sales skills are most desired, but there is a shortage of candidates emerging, especially in the banking sector. However, the scenario might be very different for boutiques, says Trevor Punnett from eJobs.
“It may appear that there are a lot of candidates out there, and there are. But, very rarely do I find who I’m looking for. I hire for boutique firms, so you essentially need someone who can develop a relationship with the client, and act in client’s best interests, whereas banks mostly need product salesmen,” says Punnet.
Although job numbers picked up and financial planners are staying put, Punnet says there is still a lot of uncertainty and volatility in the market. “You also have to consider season declines, when firms don’t make a large number of hiring decisions,” he adds.
Bob Olivier from Advantage Professional also highlighted a new trend in the market: “Planners with strong portfolios tend to stay where they are — especially if restraint clauses prevent them taking their book with them.
"For the less entrenched and disenchanted planners and other staff, counter offers are a plenty.”
There are also predictions that changes in trail commissions versus fee-for-service will see some planners exit the industry all together, creating both backfill and additional headcount requirements for planning firms.
Fee-for-service will see some quit
In a bid to avoid conflict of interest and provide greater transparency in remuneration, a recently announced switch to a fee-for-service remuneration model within the financial planning sector will see some practitioners move away from the commission-based approach.
The move will start in July 2012, with some financial practices around the country already banning commission-based payments.
While the switch to fee-for-service remuneration model benefits both the clients and the industry, the latter will also have to face its disadvantages — the cost of such a change being one of them. With this in sight, questions are being asked about its effects on recruitment levels within the financial planning sector.
Recruitment experts, however, don’t predict a grim future for those who effectively make the switch. Mortlock says: “The industry-wide shift to a fee-for-service remuneration model is helping to make demand for revenue-generating advisers even stronger than in recent years.
"Financial planners who succeed in this new remuneration environment should find themselves in a good career position in the future.”
Olivier says this probably won’t have significant impact on either the demand for financial planners or supply of professionals, but it will have an impact on the type of person and professional background employers will look for.
“Some experienced practitioners who are used to trailing commissions and not inclined toward the fee-for-service model may quit the industry,” Olivier adds. He predicts the move towards fee-for-service model will lead to higher base salaries, but less emphasis on commissions and bonus.
Salaries remain steady
Since the demand for financial planners seems to be running quite hot, salaries have stayed on a steady level around the country, with the average salary for a mid-level planner being $70,000 in the $55,000—$85,000 range, according to eJobs and Robert Walters salary surveys.
However, Hays’ survey shows even brighter results for the sector, with their average salaries for a qualified financial planner being in the $90,000—$110,000 range.
Results suggest pay packets are on the rise for paraplanners, too, going back to the $65,000—$75,000 range. Bob Olivier from Advantage Professional says the high demand for financial planners has a knock-on effect for increased demand for paraplanners and support staff.
Recruitment experts predict further rise in salary packages for financial planners and paraplanners sector with optimistic outlooks for the next year.
