There is no standout winner in the salary stakes for 2009.
Unlike 12 months ago, when Australia's west coast beat out its east coast counterparts to become the fastest mover in the salary race across most industry positions, today the mood of the sector is more sombre.
Salaries across the senior financial planner, financial planner and paraplanner areas have generally remained static in 2009, according to the 2009 IFA/Financial Recruitment Group Salary Survey for the 12 months to 30 April.
For senior financial planners, salaries across the country experienced a slight fall in the year to 30 April 2009 compared to the previous 12 months.
Across the board, average remuneration packages remained at $100,000, with a remuneration package range of $80,000 to $120,000.
In 2008, Sydney, Melbourne and Perth senior planners earned an average $105,000, with those in Brisbane, Adelaide and Canberra earning an average $102,000.
For financial planners and paraplanners, salaries remained unchanged nationwide.
Financial planners based in Sydney, Melbourne and Perth continue to earn an average salary of $85,000, while those in Adelaide and Canberra remain on $77,000 and planner salaries in Brisbane are steady at $80,000 a year.
Melbourne and Perth-based paraplanners continue to bring in an average salary of $70,000, while the salary of Sydney-based paraplanners holds firm at $73,000.
The salaries of Adelaide and Canberra-based paraplanners remain unchanged at $55,000, while Brisbane salaries hold fast at $60,000.
In terms of the senior advice positions, general managers earn between $230,000 and $450,000, while state managers earn a salary of between $180,000 and $250,000.
Regional practice development managers earn between $160,000 and $200,000, while practice development managers earn between $95,000 and $160,000.
Bonus payments for these positions ranged between zero and 30 per cent.
Most managers said they would pay a token incentive to top performers, and while long-term incentives were still part of existing packages, they were not highly valued, according to the survey.
In regards to funds management distribution, senior positions offered a wide range of salaries.
Those employed as heads of distribution earn between $250,000 and $400,000, while national key account managers took home between $200,000 and $240,000.
Key account managers earn between $160,000 and $200,000, while state managers will find between $150,000 and $200,000 in their pay packet.
Meanwhile, senior business development managers (BDM) take away between $140,000 and $180,000 a year.
However, a BDM will take home between $90,000 and $140,000 and business development associates earn between $60,000 and $75,000.
Overall, the survey found there was not much change at all, with the market dampening salaries and people movement as staff remained in their jobs, according to Financial Recruitment Group managing director Judith Beck.
"It goes down to the point that we made in terms of the findings - the salary levels are really starting to move towards the beginning to the middle, but because of the fear of making the move [to change jobs] the people there are still people who are at the top of the range. So therefore the range has stayed," Beck says.
"If the market were to stay the same for the next two or three years, then those people may end up leaving at some stage and that will affect it.
"The point we want to make is that we're finding that the majority of the people are in the beginning to mid range. Rather, there was a larger number of people hitting the top range."
How firms are faring
For ANZ head of financial planning Alan Logan, the past 12 months has led to a lot of decision making when it comes to staff retention and remuneration.
"We run a financial year that runs to the end of September each year, so at the end of September 2008 we had a good look at our business and had a look at the mix of 'rem' (remuneration), so really what percentage was bonus based, what percentage was salary and was that fair and equitable and was it getting us the right outcomes," Logan says.
"We came to the view we needed to increase our base salary somewhat for our senior planners, and that was to reflect the fact that they were really having to spend an awful lot of time with existing clients to keep reassuring them and keep looking after them and that to a degree meant they didn't have as much time available to deal with new clients.
"That represented very modest increases in some cases, we're talking maybe it might be up to 10 per cent, so not outrageous things."
Apart from a few exceptions, ANZ has not changed its system, he says.
"If you try and over-engineer your 'rem' model too much, all you do, in my view, is create undue uncertainty among advisers and you hardly ever get the benefit at the other end," he says.
"So that was our deliberate decision; let's make sure we're being fair and equitable. Let's benchmark, and let's not try and get too cute with 'rem' models because in our experience was that you very rarely get the benefits you think you're going to get."
For National Australia Bank (NAB), the firm also did not make any major changes to its remuneration structure, according to NAB financial planning general manager Geoff Rogers.
"We've not proposed a freeze at all. We had a well-established remuneration system that is clearly articulated in an agreement that exists between our practitioner force and the organisation, which is part of our enterprise agreement," Rogers says.
"And we operate on that agreement and that agreement has not changed as a result of the global financial crisis and may not necessarily be changed as a result of it."
Unlike NAB, Colonial has imposed a salary freeze across its divisions.
"We have got a salary freeze. We have a salary freeze in place for the next financial year," Colonial distribution general manager Paul Barrett says.
Despite the salary freeze, the firm has been able to manage its discretionary cost base through a spending cut program.
"The only thing we did was we introduced flexible working conditions," Barrett says.
"We actually saw a moderate take up of flexible working conditions, we had staff taking unpaid leave, working nine-day fortnights, voluntarily, we didn't actually force that on them, that was a voluntary scheme, and that saw some good take up and that has actually also contributed to the position we're in."
Redundancies
The survey found redundancy clauses of up to six months are now being requested in contracts, as candidates will not think of moving from a stable job without that comfort.
"Last year, long notice periods were seen as a negative, but this year it is a necessity. Last year they thought this would hinder them if they wanted to move companies; this year it gives them peace of mind," Financial Recruitment Group national manager of recruitment and consulting Lena Coates says.
"When speaking to different managers, some were quite open about feeling that the redundancies were very short-sighted, as they know when markets pick up again that they will be short staffed and perhaps will be trying to catch up with other competitors who may have kept some of the more experienced staff."
Managers surveyed say they remember very clearly how difficult and time consuming it was for them to recruit these people in the first place only 12 to 18 months ago, Coates says.
"Companies have tried to limit redundancies, cutting staff mainly in their operational, technical and project areas, and fighting hard to keep distribution staff. Where there was an acquisition or merger, companies tried to look at where they could utilise good staff in other areas where possible."
Counteroffers were not an issue this year. If someone resigned, the company accepted it, no matter who it was, as it was not in their budget to try to persuade them to stay by offering more money, she says.
"Staff attitude is being closely scrutinised and if you are a whinger with a negative attitude, then you could very likely be the next to go," she says.
"There is no tolerance for negativity and non-team players. It is the year of consolidation, reflection and forward planning and those with an attitude will be a casualty."
A drop in staff numbers has been felt across much of the industry.
During discussions with a wide range of funds management companies, advice businesses and larger financial services groups, it is obvious all businesses are currently very focused on belt tightening around all aspects of the balance sheet - with headcount being one of the most expensive items and one of the first areas that is looked at and cut, Coates says.
"Everyone agreed that, to date, it has been a hard and volatile year, no question about it. However, there was optimism that things would get better, but most felt it may be another 12 months of steady as she goes," she says.
Most of the companies surveyed said they did not have any plans to increase staff numbers over the next 12 months, she says.
"However, they may replace underperformers and hire better qualified planners and paraplanners. There has also been a shift by some independent planners to work for the bigger companies that have the strength, referral networks, support and stability for them to be successful," she says.
Earlier this year, ANZ was forced to dismiss close to 60 staff in its financial planning division due to a significant drop in demand for investment advice.
"We've made some changes to our business where we have made a number of positions redundant in the last few months, and that's really due to demand dropping away and a need to ensure we get our cost base set up appropriately," Logan says.
"And that was a big call and a tough one to make, particularly when the whole financial services industry's growth is based on adviser numbers. So to make a decision to make some roles redundant is pretty tough. It's pretty tough on the people involved as well, but we felt that it was the right call to make.
"I think the challenge for everyone is to look at activity per adviser and to look at the way we interact with our customers.
"We're very much trying to simplify our offer and make it as convenient as possible. So I'm hoping that if we do that well we should be able to cope with an uptick in demand with the same number of advisers that we've got now."
NAB-owned MLC was also forced to cut 120 jobs, following a review of its resourcing requirements across the company.
"We undertook a restructuring program in January and into February this year. There were in total about 40 impacted FTE (full-time equivalents); none of them were actually planners. Senior planners and planners were not impacted," Rogers says.
"In the restructure, there was a very small impact on paraplanners. Our current view, and if you take the view the planning operations are long-term businesses, it would make sense to keep your good people and build to increase the number of planners we have as we come out of this."
Colonial on the other hand has bucked the market trend of cutting staff and has either retained or hired additional staff.
"We've have had to keep our frontline staff numbers intact because we've made some pretty significant product innovations in the last little while; we're launching FirstWrap," Barrett says.
"So the last thing you want to do when you're launching a major new product is cut your frontline. So we're obviously supporting that. In fact, we've grown our frontline through the integration with Avanteos' distribution.
"We've added distribution staff to our platform sales areas and we've also added staff to our investment sales area. We've integrated the Bankwest sales staff as well, so we've actually grown our distribution footprint to support the new initiatives to take to market, and I think that is a great position to be in in the midst of a financial crisis because we're still innovating and we're still taking product to market, which is great."
Colonial has also added a number of new roles, with a head of sales role and head of platform sales role being created to further drive specialisation in its sales force.
"The overall message is that we're still continuing to maintain our level of investment and distribution," Barrett says.
Bonuses
As well as the slowdown in salaries, bonuses and other incentives have also been hit hard.
Bonus payments were nowhere near the level of last year and next year won't be any better, the survey found.
"The bonuses have been more of a token basis rather than anything of significant value, except for the risk BDMs where they did quite well," Beck says.
"There have definitely been salary freezes across the board. No-one is increasing salaries, so they all had a salary freeze on.
"It wasn't surprising given the economic climate, so it was really to be expected and really there weren't going to be an increase in salaries across the board because the salary levels are already at highs. This is at the BDM level to the senior level, so it might be different at the junior levels."
According to Logan, ANZ has not cut back or altered the company's bonus structure.
"We'll have less people earning bonuses as a result of them generating less revenue than they did last year, but we'll still have a number of our planners enjoying bonuses," he says.
"So it's important to say that while people like to say 'no more bonuses in your incentive scheme', we're not saying that at all. It's just the percentage of advisers who are earning them has dropped a bit."
Rogers is in agreement.
"It's fair to say that the average bonuses being paid now for some roles have declined year on year. That is a direct result of the revenue that has been brought into the system," he says.
"We have a system that's quite structured and it's all entirely related to the revenue, not product. So if revenue comes down then bonuses do come down. And that certainly has been our experience, they've come down. That doesn't mean we've changed the system, because when things improve they will go back up again."
As for Colonial, the firm is yet to make a decision on bonuses.
"We haven't made any decisions on bonuses at this stage. Our year end is 30 June and we'll assess our position on bonuses in light of our financial performances at the end of the financial year, so we haven't made any calls yet," Barrett says.
The fate of BDMs
When Financial Recruitment Group surveyed various BDMs and their managers this year, it was obvious some BDMs, who have been promoting specific funds or asset classes, are in a more difficult situation than 'generalist' BDMs, who might have super, risk, and debt and cash products to sell. Some of these people said they did not know what would have happened if they did not have a solid risk offering in the market.
Risk BDMs are having a good run and bonus levels in some businesses have been very good, averaging 25 per cent to 50 per cent, Financial Recruitment Group New South Wales state manager Conor Donoghue says.
"Some who are on bonus plans that are not entirely individual were affected by the overall performance of the company, but overall still did very well on their individual performance," Donoghue says.
"BDMs are having to get back to the basics and really show their relationship management skills, as well as their financial markets appreciation, as this is the time when clients are asking advisers all sorts of questions. Some advisers, not all, need the support and skills from the BDM/PDM (product development manager) to assist in these situations.
"We are finding that it is the less experienced BDMs who are struggling more around this. Perhaps the reason for this is that they have only sold in a buoyant and bull market, and don't have the skills and experience to handle such downturns in the market."
A number of managers surveyed felt some junior BDMs had it too good, with one manager claiming they have had it "too easy for too long, as their own sense of worth was over-inflated".
While all agreed BDMs will always be a necessary part of their business model to service advisers, the landscape will change as to what they will be looking for if they need to hire, Donoghue says.
"Most agreed it would be unlikely that they would need to hire a BDM in the next 12 months. However, if someone leaves, then they will replace them. Experience with strong technical and sales skills will be essential and they will not offer salaries at the top of the scale, but rather at the lower to mid-level range of the scale. All agreed that salaries will be tapered back and all agreed that they would look internally to promote first.
"The companies with BDM training programs already in place will be well set for future openings and this will also help to taper back the salary ranges in the future. The short-term incentive plans will still be the main carrot for BDMs when the market picks up."
According to Barrett, Colonial has maintained its BDM numbers and in some cases has even replaced departed staff.
"The rationale behind that is our BDMs are in many cases the frontline of our organisation. We see this as very important to continue to have an investment in our frontline," he says.
"So we're not in a position where we have to be cutting staff numbers and we can still replace critical roles."
Coates says the survey found that after years of positive growth, the businesses that will survive in the current global financial conditions are those able to diversify their revenue streams across risk, mortgage broking and financial planning.
According to one manager: "In the past it has been very easy for planners to write business, however, the quality planners that will be in future demand will be those that can diversify their skill set to meet the changing requirements of their client and that are able to offer the client high-quality advice that is not focused just on one area."
