Journal of Financial Planning: February 2010
Rebecca King is the manager of the FPA Research Center. Contact her at Rebecca.King@FPAnet.org .
What makes employees of financial planning firms happy? Overall, the better compensated and more involved they are in the firm's core services, the happier they'll be.
Employee satisfaction drivers are just one area explored in the 2009 Planner and Staff Salary Survey, produced by the FPA Research Center. The data for this section is comprised of 692 responses from individuals in a variety of positions within a financial planning firm and span across all firm sizes and types. In addition to self-identified drivers of satisfaction levels, this study also collected information on job characteristics to confirm if there is a statistically positive correlation between the perceived drivers and actual satisfaction, and to identify other drivers of satisfaction that the individual respondent may not actively recognize. These demonstrated drivers can be broken into four different categories: compensation, benefits, ownership, and job functions.
The following is an edited excerpt from the 2009 Planner and Staff Salary Survey. The complete report, developed from responses from more than 1,400 practices, will be available for purchase in August. Visit http://www.shopfpa.org/ or contact Rebecca King, manager of the FPA Research Center, for more information.
Compensation
About 60 percent of respondents receive a bonus and nearly one in three (32 percent) receive incentive pay. However, the method of compensation does not appear to have an effect on employee satisfaction. For example, receiving incentive pay versus not receiving incentive pay appears to have little to do with satisfaction.
Although the method of compensation does not matter, the amount of compensation does. The more financial compensation employees receive, the more likely they are to be satisfied.
Benefits
Benefits also play a role in employee satisfaction. Employees are more likely to be dissatisfied if they do not receive benefits, if they have access to fewer categories of benefits, and if they pay a larger percentage of their benefit costs.
Firms that do not provide any benefits to employees are much more likely to have dissatisfied employees. One in four respondents (26 percent) who are not at all satisfied with their job do not receive benefits. In addition, both those who are somewhat satisfied and those who are not at all satisfied are less likely to report access to insurance benefits, retirement benefits, time off/paid leave/sick time, and other benefits.
It is important, however, to note that it does not appear to matter what specific benefits are offered. For example, offering dental insurance does not specifically impact satisfaction. So while it is important to offer several different types of benefits, there is not a specific benefit that is likely to increase satisfaction.
Alternately, the amount the employee pays toward those benefits does have an impact on satisfaction. Less satisfied employees are more likely to report that they pay a larger percent of the premiums or fees for their benefits. Those who are less satisfied are nearly twice as likely to report paying for 51 percent or more of the benefit costs compared to those who are extremely or very satisfied. Those who are extremely or very satisfied are 50 percent more likely to indicate that their employer pays for 51 percent of more of the benefit costs compared to the less satisfied respondents.
Ownership
Ownership options and the amount of ownership an individual has in the practice correlate to satisfaction. Employees are more likely to feel satisfied if they have ownership options in the practice and if they own a larger percent of the practice. This may be due to benefits of ownership, for example, the ability to set one's own hours, rather than the actual ownership of the practice.
Job Functions
In addition to financial ownership of the firm, respondents are more likely to be satisfied if their job functions include more involvement in the firm's core services and the direction of the firm. In fact, those who are extremely satisfied are three times more likely that those who are not at all satisfied to provide strategic planning for the firm. Extremely satisfied respondents are also nearly twice as likely to be involved in actual financial planning or the development of the financial plan as those who are not at all satisfied. Those who are somewhat or not at all satisfied are much more likely to be providing administrative assistance.
This indicates that there is an opportunity for owners of a practice to increase employee satisfaction by making employees a more integral part of the team and showing them how their contribution is significant.
Job Functions by Level of Satisfaction
Total
Extremely satisfied
Very satisfied
Satisfied
Somewhat satisfied
Not at all satisfied
Client relationship management
78%
80%
79%
72%
85%
70%
Financial planning/development of the financial plan
75%
80%
75%
75%
77%
43%
Investment strategy research and recommendations
52%
48%
55%
47%
65%
22%
New business development
46%
56%
45%
40%
51%
30%
Buy and sell securities
35%
28%
39%
32%
43%
22%
General office operations
19%
20%
16%
19%
22%
35%
Strategic planning for firm
17%
27%
19%
12%
11%
9%
Firm operation management
16%
22%
15%
11%
20%
4%
Compliance management
13%
13%
15%
11%
12%
9%
Administrative assistance
13%
8%
10%
17%
22%
22%
Staffing decisions including hiring and compensation strategy
10%
14%
12%
6%
5%
13%
Other (please specify)
9%
9%
6%
12%
6%
30%
IT needs
8%
9%
5%
7%
14%
4%
Firm financial management
5%
7%
8%
4%
0%
4%
About the Table
The table above is set up to show the correlation between the job function and the level of individual satisfaction with the "total" column representing the average.
For example, the table shows that, on average, 75 percent of individuals are involved in financial planning/development of the plan. Eighty percent of those who are extremely satisfied are involved in financial planning/development of the plan and only 43 percent of those who are not satisfied are involved in financial planning/development of the plan.
Those who are not satisfied are only 50 percent as likely as those who are extremely satisfied to be involved in financial planning. This shows a correction between the likelihood of being satisfied and being involved in the actual process of financial planning.