Booming Perth was the biggest mover in the 2008 Financial Recruitment Group (FRG), inching up to be close to or on a par with Sydney and Melbourne across most positions.
Senior paraplanners across the country gained in the salary stakes, with Perth's paraplanner market rate rising through the year from $72,000 to $90,000. In Sydney, the hike was from $80,000 to $95,000.
Those figures would be no surprise to Axa Financial Advice Network national manager Paul Robertson, who says good-quality paraplanners are in "really short supply and that is where rates are being driven up".
On the other hand, financial planner remuneration tended to move in line with the Consumer Price Index (CPI). The exceptions were those advisers who were beneficiaries of companies willing to pay above the market rate to meet corporate targets.
Non-bank financial planners in Perth were up $10,000 from $85,000, while bank financial planners in Perth climbed $8000 to be on $85,000, in line with those in Sydney.
Senior non-bank planners moved up in Sydney, Perth, Melbourne and Canberra, while senior bank planners were more in line with the CPI.
Aside from paraplanners and some financial planners, few ranges increased from last year, but most of the positions surveyed by Financial Recruitment Group (FRG) were already at the top of the range. Counteroffers this year were the major cause of ranges going to the limit or over, with companies desperately trying to hang onto their best staff.
"Next year, we will probably see a nil increase in the range as companies are not willing to go higher," FRG managing director Judith Beck says.
"In their mind, enough is enough and they are now looking at better internal succession plans and 'next-steppers'. They are looking closer at the worth of the role too."
Risk business development managers (BDM) remain highly sought after. Their salary levels have increased considerably with an average range between $120,000 and $140,000 along with attractive bonus plans.
"During 2007, we witnessed more recognition being given to risk BDMs who in the past have been left in the shadows of their investment and platform colleagues," FRG executive director Peter Dawson says.
On the investment side, bonuses for next year are predicted to be substantially lower. The majority of companies surveyed paid an average bonus in excess of 50 per cent this year and there were several cases of high performers earning over 100 per cent of their base salary.
Most also stated they did not expect the bonuses for 2009 to be at these levels.
"The 2007 year recorded the highest level of bonus payments for distribution sales personnel," Dawson says.
"High bonuses were driven by the combination of rising investment markets and underpinned by positive investor sentiment coupled with the one-off superannuation window that saw significant new business flows to fund managers. The bonus range was broad and reflected how well companies were performing and the achievement of distribution divisions and the achievement of individual targets."
In funds management, state managers, key account managers, national key account managers and heads of distribution enjoyed bonuses of up to 100 per cent plus long-term incentives.
In the advice industry, financial planners remain in demand, particularly those who have portable client bases, Dawson says.
But institutional licensees have continued to broaden their recruitment focus with an emphasis on developing career transition programs for their own staff. They have built 'adviser academies' with the intention of tapping into talent from other industries and occupations to convert new entrants into fully-fledged advisers.
"These initiatives have to a considerable extent reduced the sole reliance on recruiting from the existing adviser gene pool and taken some of the heat out of increases in remuneration," Dawson says.
Licensees have been focused on ensuring their advisers are at least at market in terms of short and long-term incentives.
"Independent advice practices have positioned both remuneration and career path planning in their recruitment of advisers," Dawson says.
"Young advisers who are well qualified and have a track record of performance are brought into practices on market base remuneration and short-term incentives. If they perform well in their roles, they are offered equity in the business.
"These generation X and Y planners are the key to principals' succession planning and their packages may include a range of non-cash benefits, such as payment for industry qualifications, attendance at industry conferences and workshops thorough to additional time off work to pursue personal and family interests."
Robertson admits it continues to be tough to find the right staff.
"Planners are still in short supply. We have 30 candidates we are working on placing at the moment and we have had to be innovative in how we have sourced them. We have had to develop new approaches for recruitment and also we are developing existing staff into planning roles," he says.
Risk advisers are moving to close the remuneration gap between themselves and financial advisers, Dawson adds.
This is particularly noticeable with risk practitioners who are well-qualified and have committed to further their professional standing by actively being involved in further education and training.
"The Association of Financial Advisers (AFA) has lifted the bar on professionalism in risk advice and its members have begun to see tangible results in terms of an upward lift in remuneration," Dawson says.
Softer incentives rather than cash are also becoming more common, Beck says, as companies know they have reached their salary caps.
"They are looking at their culture, providing them perhaps with lifestyle benefits, such as gym membership, health insurance, flexible hours and a four-day week. A few offer longer holidays. One company has a lifestyle bonus, which is part of their employment package and they have to take it - they can't take it as cash."
Salary - it is what it is
Some companies may baulk at meeting the market rate, but for Robertson it's simple: you pay the rate for the role.
For Axa, it's based on a combination of what the market is paying and what other positions within the organisation are paying.
"A few years ago, we had a look at the market in terms of salaries and how our staff were compared with the market. We took a bit of action to do catch up where needed and now pretty much everyone is in line with the market," Robertson says.
Zurich head of life risk Andrew McKee says the company continues to pay market rates to retain its good-quality BDM force. It offers an annual incentive in line with the sales generated.
"There is a big range from junior to senior and it is more challenging to keep staff in this market," McKee says.
"BDMs are still in demand, although we think that may dampen because of the market downturn. But at the moment, there is still strong demand in the life insurance sector."
Beck has noticed a change in company attitude to salary ranges, with many saying enough is enough.
"What they are doing is looking at internal succession plans more, training people up rather than going out and trying to buy someone. They are really looking at the worth of the role."
Inpro Australia managing director and former ANZ Financial Planning general manager Mike Goodall says larger organisations are more readily prepared to pay the market rate for planners. However, smaller businesses are finding it challenging, resorting to more creative options.
"Inherently smaller practices always paid a smaller amount than corporations," Goodall says.
"I can't match an ING or ANZ or another fund manager. That is the case for administration staff with advisers. We have one salaried adviser, the rest are on a revenue split model and we have found that works pretty well. People will look for value and the big issue for the independently-minded adviser is equity. At the end of the day, if you've matched the benefits, then the thing that will get them through the door is equity."
AFA chief executive Richard Klipin says it's the overall package rather than the dollars that is the key to attracting and retaining staff.
The market mix of short-term packages with mid-term bonuses and longer-term options linked to shares for senior people is a strong way to recognise staff and keep them loyal to an organisation.
"Job role and the culture of the organisation as well as broader opportunities are key to any individual's call about who they work with and that is what this whole area of employer of choice is about," Klipin says.
Future
FRG's crystal ball gazing reveals more focus on soft benefits, such as honing the culture, introducing more flexible working hours, increasing superannuation bonuses and developing succession plans.
Paraplanners can also expect the good times to ease with a tapering in their base rates.
"Through 2008, it's expected that there will be more effort and resources expended by major advice groups as they aim to meet their parpaplanning personnel requirements outside of traditionally-adopted recruitment practices," Dawson says.
"The knock-on effect from this should be a tapering in the significant increases in base remuneration for senior paraplanners that we have witnessed in the past.
"It would also be expected that the growth in adviser base remuneration will continue to be constrained as we move through a period of investor uncertainty and large licensees gain more traction through their 'academies'."
After five good years, Robertson believes revenue may drop and some businesses may put vacancies on hold. There will still be demand and growth but at a slower rate.
Goodall says more planners will retire and succeed their business to other people rather than through the ranks of recruitment.
Also, incentives that were once the domain of executives in funds management and banks will become more mainstream for financial planners.
"The need for advice is still growing," he says.
"The demand exceeds supply therefore the price of advice and cost to employers will go up. What will change is the make-up of what that compensation looks like."
McKee says while salary increases may soften in the next 12-18 months due to mixed market conditions, the long-term trend is for tight employment and growth in financial services.
Klipin agrees, saying revenue streaming into super will help to ensure steady growth.
"The demand has been strong for well over a decade and I think that will continue," he says.
"The issues we are seeing as an association, such as the really tight labour market, the skills gap and retiring baby boomers, are very real. While markets may fluctuate, the overall shape of the industry is that it is growing. That means there will be demand for competent, skilled professional people in all parts of the value chain."
