HSBC has taken a bold move that many in the industry have long considered unthinkable: it has put all of its financial advisors on salary.
Their rationale??
“HSBC made the switch to align the compensation structure for advisors in the U.S. with those in the rest of the ban,” said Steve Saltzman, a partner with Kehrer Saltzman & Associates. “It puts the US organization on a consistent basis with the rest of the enterprise,” sources at HSBC told him.
In a statement, HSBC confirmed what observers surmised.
“HSBC introduced a new wealth incentive plan for its wealth sales team in the U.S. and other priority markets in January this year removing all product sales incentives so our employees are rewarded on client experience, sales quality and values measures,” Neil Brazil, vice president and senior manager of Communications at HSBC North America, said in an email. “The plan is aligned with our aim of building long-term sustainable relationships with clients based on trust and expertise, and with HSBC’s strategy and values.”
[pullquote]“A good financial advisor wants to be compensated in direct proportion to their results and therefore like to be on 100% commission.” [/pullquote]But the move may also help resolve compensation issues that have divided bankers and advisors, say industry observers. Advisors often make more money than bankers who are paid a salary and a bonus. According to some, the disparity leads to a great deal of animosity and jealousy between the two groups and prevents them from working together productively.
Will they lose some of their best advisors? Probably. Financial advisors are loath to accept salaries because it goes against their nature, observers say.
“A good financial advisor wants to be compensated in direct proportion to their results and therefore like to be on 100% commission.”
Read Margarida Correia’s OnWallStreet.com article.