Consultant relations professionals are resisting calls to make their compensation more long term to align it with the duration of their clients’ investments, recruiters say, following recent European proposals along those lines that would have affected U.S. managers with E.U. arms.
In July, the European Union rejected legislation that would have capped asset managers’ bonuses and forced compensation to be deferred over longer periods of time. The proposed restrictions came on the coattails of a successful law imposing similar restrictions on bankers…
Alan Johnson, managing director at compensation-consulting firm Johnson Associates, says he works with clients who would like to switch their consultant relations staff over to a commission structure. But Johnson discourages that idea, saying that consultant relations professionals should be encouraged to take their time developing relationships and meeting the needs of the consultants, not the other way around. “If you motivate people to push what’s hot at the moment, you’re not going to have anything in the future,” says Johnson. “It’s a long term relationship, and the impact [consultant relations] have is indirect.”
Just as sales professionals have not responded well to attempts to switch their compensation to a bonus structure, as reported, consultant relations professionals do not usually like a commission structure. “It takes years to foster relationships,” says Johnson. Paying consultant relations a more black-and-white commission basis could make it difficult for them to earn commission in the earlier years of their career, as well as in lean sales periods.
While deferred commission payments may work for sales people in order to encourage better retention, it’s not a necessary hook for consultant relations staff, according to Johnson. Consultant relations professionals generally have better retention as their jobs are seen as less stressful and more long-term given that they involve developing relationships in slow moving bureaucracies. Nevertheless, not everything about a consultant relations pro’s duties are laid back. “[Consultant relations] a hard job in an industry where people want to get things done quickly,” he says.
FundFire / August 22, 2013