Findings from the Kehrer Group Survey of Compensation of Directors of Bank-Based Advisors
Many investment services directors in financial institutions experience frequent changes to their compensation plans. Almost half of the directors participating in the Kehrer Group Director Compensation Study have compensation plans that have been in effect for one year or less. Despite that, participants report that 9% of the plans will change next year, and another 11% are under review, including two of the plans that are only a year old.
On the other hand, one-fifth of the plans have been in place for at least 5 years.
We found that the age of the plan actually is a determinant of how much directors are paid. Controlling for the many factors that might influence director compensation – experience, tenure, professional designations, size of the firm or institution, the performance of the firm, whether the firm is in a bank or credit union, whether the director was promoted from within or was recruited from the outside, etc. – directors who are paid under a plan that has been in place for some time earn more than like directors paid under a plan established more recently.
That suggests that banks and credit unions now perceive less value in the role of the director, and perhaps the importance of the investment services business altogether.
About The Kehrer Group Director Compensation Study
In response to many requests from the bank and credit union financial advice community, Kehrer Group conducted a survey of the compensation of the executives who manage the investment services business in their institutions. A total of 55 executives participated. They were asked to provide their compensation plan, their actual compensation for 2023, and details about their span of control, tenure, industry experience, professional designations, and more.
The titles of the positions covered varied widely, including CEO, President, Director of Wealth Management, and Program Manager. The job description included management of the advisor force directly, or through management of one or more sales managers, oversight of operations and compliance, and P&L responsibility to the institution.
We then matched the participating executives against data about their businesses and institutions from the 2023-2024 Kehrer Group Annual Benchmarking Survey. The resulting dataset supported sophisticated statistical analysis to understand the key drivers of compensation for the director role.
The study is available for $1,000 for firms with less than 25 advisors and for $2,000 for larger firms. Participants receive the study with a 50% discount. For further information and to purchase the study, contact tim@kehrergroup.com