We know the scope and range of employee benefits have changed dramatically. According to a recent study by the Society of Human Resources Management (SHRM), telecommuting benefits alone have risen threefold over the past 20 years, to 60% of employers surveyed. Fully 88% of organizations now offer professional memberships as a benefit, up from just 65% 20 years ago.
Financial advisory practices are no exception.
"The majority of advisory firms do a great job of offering generous paid time off (PTO) benefits, which go a long way in helping employees—especially working parents—balance their busy lives," says Kelli Cruz, founder of Cruz Consulting Group, a San Francisco-based talent-consulting firm focused on the financial advisory industry. "Many firms offer the flexibility to use PTO in hourly increments to allow employees to come in to work late or leave early to take care of pressing personal needs and issues. No parent wants to miss that soccer finals game!"
Beyond paid time off, Cruz suggests that the most forward-thinking firms maintain a degree of flexibility. "Providing flexible work options such as telecommuting, flexible schedules, part-time schedules, and even freelance options—so you don’t lose a valuable resource completely—are ways advisory firms can be creative and stay competitive," she says.
That's the point, of course—staying competitive. Specifically, firms are extending nontraditional benefits to attract and retain talent. As employers seeks to snag the best talent, they may find themselves jockeying to offer the best benefits, too.
Cruz acknowledges, however, that some managers are resistant. "I get a lot of pushback from firm owners on their inability to offer flexible work options," she says. "There is a mindset that because this is a client-focused relationship business, employees have to be physically at their desks from 8:00 to 5:00 Monday through Friday."
It may have been that way once, but modern life hums at a different pace. "With all of the technology and software improvements/advancements the industry has experienced over the past five years, that simply is not the case anymore," Cruz points out. "Work-life balance is an important job satisfaction factor for Millennials, who now represent the largest generation in the U.S. labor force. In addition, Gen Xers value time more than money. … Firms will score a huge win with this part of their workforce as well by increasing flexible work options," she insists.
To be sure, there are many ways of structuring benefits packages. Last year, a study by the Financial Planning Association (FPA) found a broad range of incentive plans. "Many firms structure their compensation plans strategically, using different elements (such as incentives linked to team performance) to drive desired behaviors," said the report. "For example, advisers [sic.] and planners are more likely to receive some form of incentive pay, whereas non-adviser management and staff are more likely to receive bonuses. In many cases, firms use a fairly sophisticated mix of compensation types, tied to different drivers."
Often, the levels of compensation depend on employee longevity. But overall, incentives and bonuses are driven by individual performance. Roughly half of the firms surveyed, though, also tied compensation to team or even firm-wide results. The size of the firm greatly influences how compensation is structured. "Among practices with three team members, 55% offer benefits, whereas 86% of firms with four team members and 92% of those with 10 or more do so," said the FPA report.
Even within standard benefits such as health insurance, there are subtle variations. Among those that contribute toward health-insurance premiums, for instance, half pay the total cost of those premiums while the other half require employee contributions. The same goes for disability and accident insurance.
It's important for managers to communicate with employees and potential employees about what they're looking for. The FPA found some discrepancies between what bosses think they want and what workers actually want. "Decision makers name sick time as the most important offering, whereas staff mention the chance to earn equity in the firm," the FPA reports. "That was the largest gap in how the two groups perceive benefit value."
Indeed, Cruz notes that in the SHRM study, "the top three benefits that employees rated as very important to their job satisfaction were paid time off (63%), health care/medical benefits (62%), and flexibility to balance life and work issues (53%)."
Such desires shouldn't be ignored. "Benefits are definitely an important part of the overall compensation mix and need to be factored into the firm’s overall compensation strategy," says Cruz, "balanced with salary, incentives, career opportunities, training and education, and the other ways that firms promote loyalty and superior performance."
How Advisory Firms Can Stay Competitive With Employee Benefits
August 31, 2016
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