Recent data from Kehrer Saltzman & Associates reports that only about one in four advisors (24%) are paid based on their production in the current month, down from 58% who were paid that way in 1997.
Today almost half of advisors (48%) are compensated based on their average production over the previous six months (24%) or the previous year (24%), payout structures that were not used in 1997, according to the firm’s recent survey of compensation practices.
“In 1997 no credit union or bank reported using a trailing average of production to compute advisor pay. This change to a rolling average has reduced some of the volatility common in compensation plans that tied payout to each individual month’s production,” Kenneth Kehrer, a principal of Kehrer Saltzman & Associates, said in a statement to OnWallStreet.com this week.
In 2012, advisors earned average payouts on annual production that ranged from 20% to 41%.