For retail financial advisers struggling to grow revenue in the face of clients' decimated portfolios, here's welcome news: brokerage firms are shifting emphasis toward awarding bonuses based on net new assets rather than additional revenue.
Wells Fargo Advisors is the latest to embrace the trend, according to Investment News. Before this year, its 12,000 advisers had received bonuses mainly based on revenue growth. Now their awards will also be pegged to the new assets a broker brings in. A Wells broker must attract at least $500,000 net new assets for the new award, which typically will be about 2 percent of the adviser's total revenue, a spokeswoman told Investment News.
Wells Fargo is following other large brokerages that launched similar new-asset-based compensation programs. The programs provide a new incentive for brokers who face an uphill battle growing overall revenue after the 2008 downturn in stock and bond markets caused heavy losses in client portfolios. Even after returning 26 percent last year, the S&P 500 stock index is still 14 percent below its year-end 2006 level on a total return basis. That means a smaller total pool of clients above the $1 million high-net worth threshold, while just as many brokers battle for their business.