The use of a “balanced scorecard” for paying adviser bonuses will avoid any conflicted remuneration and provide a framework for communicating an advice firm’s strategic vision, according to an HR consultant.
People Focused Consulting principal Christine Bau said in a blog that a balanced scorecard provides an opportunity to signal to advisers how they should go about achieving the desired business results, and what behaviours the business will reward and encourage.
She said that, according to figures released by ASIC, a third of licensees are utilising a balanced scorecard to pay bonuses to advisers.
“This approach ensures bonuses are determined using a range of measures that are not solely linked to the recommendation or sale of financial products,” Ms Bau said.
“The ability to define and articulate your company values and culture cannot be underestimated.”
Ms Bau said an added advantage of using a balanced scorecard is that it provides a framework for communicating how the organisation’s strategic vision aligns to the day-to-day work performed by advisers and employees generally.
Further, she said it identifies a range of financial and non-financial indicators that need to be achieved to be considered eligible for a bonus.
“These are categorised into four groups of equal or similar weighting – employees, clients, processes and financial,” Ms Bau said.
“Thus, the model implies that strong performance involves more than just financial results.”
Shartru Wealth chief executive Robert Coyte said in an ifa blog that it is impossible for financial planning to be provided in a way in which the adviser’s remuneration is not conflicted.
“The adviser and the client are different people so they naturally have distinct interests and these will conflict when providing a service,” Mr Coyte said.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 11 Dec 2018ASIC cancels AFSL of Queensland groupBy Eliot Hastie
- 11 Dec 2018Liberal Party has done ‘almost nothing’ for advisersBy James Mitchell
- 11 Dec 2018Better advice complaints resolution needed, says ASICBy Adrian Flores
- 11 Dec 2018Wealth management holders unlikely to seek adviceBy Sarah Simpkins
- 10 Dec 2018Only 12% of advice practices have exit plansBy Adrian Flores
- 10 Dec 2018CIPRs need to account for future mortality rates, study findsBy Adrian Flores
- view all