SESSION TWO
WORKBOOK
Impressionist Decisions
and Notes for Modules
1–5
BSMARTer
Business Simulation Management
and Relationship Training
MODULE 1
Organizational Structure
and Compensation
Service Team Structure
Example diagram of service team structure.
Lead Advisor
Associate Advisor
Client Service
Administrator
1
Service Team Structure
Draw a picture of your service team structure.
Team 1
Lead
Advisor
Associate
Advisor
CSA
Team 2
Lead
Advisor
Associate
Advisor
CSA
Team 3
Lead
Advisor
Associate
Advisor
CSA
There will be 8 teams
2
Service Team Structure
Provide an explanation of your service team structure.
• We have created a team structure. We currently have 8 teams. Each team has capacity for 120
client relationships. Currently we have excess capacity as each team manages approximately 100
relationships. In addition to the client facing team structure, we feel we are large enough with 8
teams to benefit from matrix management across each of the three roles identified.
• One goal we have with the Team Structure is to create leverage. The role of the Associate
Advisor is to handle many of the client interactions in order to free up the Lead Advisor’s time to
work with (and prospect for) larger clients. The same principle applies to CSA’s. We’d like our
CSAs to handle nearly all of the administrative duties in order to allow our Associate Advisors and
Lead Advisors to focus on client facing activities. We continuously look for opportunities to
insert lower cost of labor to handle our less critical tasks.
• Although the matrix management does add some level of bureaucracy and costs, we believe the
benefits in sharing best practices and creating a consistent client service model across each of our
8 teams outweigh the costs. We also believe it allows us to better define (and control) job
descriptions and more actively manage our people
• Additionally, this structure enables CSA’s as well as Associate Advisors the opportunity to work
with different Lead Advisors and Junior Partners helping with cross training, knowledge sharing
and career development. We believe this feature will be critical in addressing some of the poor
morale amongst the junior staff.
• Again, each team is responsible for up to 120 client relationships. We’re currently under capacity,
with each team covering approx 100 relationships. We recognize this excess capacity will cost us
a couple of percentage points in operating margin, but we’ve made a conscious decision not to
lay off additional staff. We feel it would be more costly in the long run to have to “re-hire” many
of these same people down the road.
• Lead Advisors – Responsible primarily for business development. Run the annual client review
and have final decision making for client portfolios. They also help with the development of
Associate Advisors and CSAs.
• Associate Advisors – Assist lead advisor, answers client inquiries on portfolio and day to day
wealth management issues
• Client Service Administrators – Handle regular maintenance and servicing
• We let 1 Associate Advisor and 1 CSA go due to poor performance evaluations and client
feedback. Revenue saved here will be deployed to address some below market salary issues that
the firm faces.
* See initiatives regarding bloated staff issues
3
Compensation
Benchmarking
Determine base compensation for three employees in your briefing
book. Complete the task using the next two pages.
Wealth Management Junior Partners
Position
Salary
Bonus
Total
Your Lowest-Paid
Employee
$74,561
$10,439
$85,000
Your Highest-Paid
Employee
$236,842
$33,158
$270,000
Mid-range
$105,263
$14,737
$120,000
Benchmark
Median
$175,000
$46,000
$240,000**
Benchmark Third
Quartile
$250,000
$77,000
$380,000**
**Total includes Salary, Bonus and Perks
4
Compensation
Benchmarking
Determine base compensation for three employees in your briefing
book. Complete the task using the next two pages.
Wealth Management Lead Advisors
Position
Salary
Bonus
Total
Your Lowest-Paid
Employee
$241,228
$33,772
$275,000
Your Highest-Paid
Employee
$289,474
$40,526
$330,000
Mid-range
$254,386
$35,614
$290,000
Benchmark
Median
Benchmark Third
Quartile
4
Compensation
Benchmarking
What changes, if any, will you make to compensation?
• Address dramatic salary disparities for Lead advisor and Junior Partner salaries based on:
• Benchmarking study and market rates for specific roles
• Tenure with the firm
• Experience and designations
• Number of clients and size of assets the advisor is covering
• Job descriptions and specific roles and responsibilities
• Clarity on Bonus weightings and factors
• Make salary a smaller percentage of total compensation and increase bonus opportunity as a
percentage of total compensation for Junior Partners and Lead Advisors. To be consistent with
our compensation philosophy, we will pay salaries at mid range of the market rate. Employees
can make it to the top quartile based on their bonus pay out.
• Create salary and bonus structure for Senior Partners based on actual roles and responsibilities.
We must have a clear delineation between salary and bonus. Salary will be performing the duties
of your job, bonuses will be awarded for above and beyond performance.
• We will address Junior Partner role and title and determine which of them should be Lead
Advisors based on their role. We believe it’s important to make sure we have consistent and well
understood job titles. By doing this, we think it will help address some of the current
dissatisfaction amongst employees around perceived unfairness in compensation.
• We currently have a number of Lead Advisors with 85% of their income coming from salary and a
salary level in the top 10% (based on benchmarking data). This is inconsistent with our
compensation philosophy and needs to be addressed. More of their total compensation will be
shifted towards a bonus structure. Due to the sensitivity around this subject (we want to be
careful not to lose a Lead Advisor) , this will likely be phased in over a two year period.
• Not immediately, but over time we would like to become more transparent with our employees
regarding compensation. We first feel we need to address some of the discrepancies and further
clean up job descriptions and titles.
5
MODULE 2
Staff Selection and
Performance Management
Job Advertisement
Design a job ad for the position specified in your briefing.
(20 minutes)
Don’t have to do this page
6
Performance Evaluation
Design a performance evaluation form for Lead Advisors
Job Factor
Explanation
1. Business development (50%)
New clients, new revenue, COI
contacts and development,
2. Client satisfaction (25%)
Client retention and client satisfaction
survey/NPS scores
3. Team management/development
(15%)
How well are you helping develop
AA’s and CSA’s.
4. Firm contribution (10%)
Team player, corporate responsibility,
community involvement
Notes
• Performance evaluation above is for Lead Advisors. AA’s and CSA’s will have slightly different
factors and weightings.
• For quantitative measures (for example business development), Lead Advisors will also have
access to a dash board that will provide them with real time data as to where they stand.
Describe how the form will be used.
• Performance evaluation with the four factors listed will be reviewed and discussed with manager
quarterly. Employees should know exactly where they stand and there should be no surprises at
year end.
• In addition to quantitative measurements, managers will qualitatively rate their direct reports on
each of these four measures on an annual basis
7
Performance Evaluation
Design a performance evaluation form. Follow the worksheet.
(20 minutes) (this is for a Associate Advisors)
Job Factor
Explanation
1. Business development (25%)
New clients, new revenue, COI
contacts and development,
2. Client satisfaction (50%)
Client retention and client satisfaction
survey/NPS scores
3. Team management/development
(15%)
How well are you helping develop
Lead Advisors and CSA’s.
4. Firm contribution (10%)
Team player, corporate responsibility,
community involvement
Notes
• Performance evaluation above is for Associate Advisors. Please note, we are re-naming Service
Advisor to Associate Advisor.
Describe how the forum will be used.
* Same as above (See Lead Advisor roles)
7
MODULE 3
The Culture of Your Firm
Organizational Culture
Describe the culture of your firm.
What changes would you make? How?
Today the staff and the partners are disconnected. Compensation disparities although not openly
disclosed are impacting employee morale. Some lead advisors make dramatically more than some
of the junior partners and the value of being a partner is openly questioned. In general the staff is a
laid back compared to the hard charging nature of the Senior Partners. The staff do not aspire to
have lifestyles similar to the Senior Partners (perceived as workaholics) and the partners don’t
understand the lack of ambition demonstrated by certain members of the staff.
Future state:
Culturally we’d like to become more transparent. This includes transparency around the vision of
our firm, the goals of the business, the performance of the business, employee expectations,
rewards of partnership, career opportunities and levels of compensation for various roles and
responsibilities.
Impressionist Inc will be a place that accepts those interested in work/life balance and those that
are highly ambitious and driven. We understand this will require and lead to various levels of
compensation and we accept that. We will financially reward those individuals who make the
greatest contribution to the firm. While we will welcome those seeking a work/life balance,
Associates will be expected to do excellent work and contribute to the firm’s mission, vision,
financial well-being. Team members that don’t buy into the culture and vision (or contribute to our
financial well-being) will be managed out quickly.
We’re going to work with our Fidelity Relationship Manager and Practice Management consultant to
understand how to more effectively work with employees that are Gen X, Y and Millennials.
We will also revisit two areas: 1) Our hiring process – can we do a better job up-front of identifying
the right fits for our firm? 2) Employee on-boarding – what is the best way to train and indoctrinate
new employees to the Impressionist Culture. What does it mean to some day be a Partner?
**For purposes of this exercise, we have focused on the Wealth Management portion of our
business. We realize we have not yet addressed potential cultural issues created between our two
business lines: Wealth Management and Investment Management.
8
MODULE 4
Incentive Compensation
Partner Compensation
Design Advisor Bonus Plan
• We will not be offering the 50% upfront bonus for internal advisors for referrals to the
Investment Management side of the business as it creates a “dramatic” conflict if interest. In
certain cases, where the growth opportunity and economics warrant it, we will consider offering
the 50% upfront bonus to external Advisors and certain COIs.
• Part of our effectiveness on the Wealth Management side is our objectivity. Although at the firm
level we still have a conflict of interest when our WM side utilizes our investment products for
client portfolios, we feel that it is a conflict of interest we can currently manage and it has no
impact on a Lead Advisor’s salary or bonus. From a salary and bonus perspective, we feel it’s
important for our Lead Advisors to maintain their objectivity.
9
MODULE 5
Partner Compensation
Partner Compensation
Set the base compensation for your partners.
• We’re going to have a salary that compensates partners based on their job responsibilities. All
partners will receive a base salary that pays them a median level market rate for doing their jobs.
Consistent with our compensation philosophy for all of our employees, bonus payments (which
will be paid for contributions above their job responsibilities) will allow our partners to
“potentially” be compensated in the top quartile
• We will utilize several benchmarking studies to set market rates.
10
Partner Incentive
Compensation
Create, discuss and define incentive compensation for partners.
• Partner incentive compensation will come in the form of their bonus payment and well as a
dividend on their partnership shares. Individual incentives will be primarily covered through
salary and bonus while firm level incentives will primarily be met with dividends and increased
value of their partnership shares.
11
Other Initiatives
Describe any other initiatives you will undertake as a firm. These
may be outside of the scope of compensation and people but may be
important parts of your case.
Initiative
Explanation
1. Explore separating the two
business lines.
Meet with Ensemble Group to
determine pros and cons of two
separate business lines.
2. Firm valuation
Independent valuation on WM and IM
business every two years. Help with
articulating value of partnership.
Notes
3.
4.
5.
6.
12