News
Achievement, bonuses and commission: The ABCs of broker remuneration in 2023 ‒ analysis
Getting the right commission structure in place and introducing bonuses that incentivise higher performance levels are key to retaining brokers and making them feel valued in a time of pay pressure, adviser firms have said.
New data from the Office for National Statistics this week revealed that between September and November average pay rose by 6.4 per cent compared with the same period the year before, the fastest rate of growth in more than two decades. Yet it still lags behind inflation, meaning that in real terms wages are down by 2.6 per cent, which is prompting plenty of workers to ask for a pay rise from their bosses.
And intermediary firms have told Mortgage Solutions how they are handling remuneration with their teams.
Get the commission structure right
Richard Campo, founder of Rose Capital Partners, said that brokers are often the easiest members of the team to deal with when it comes to pay “as if the commission structure is correct and your team are rewarded for the work they do, they can simply knuckle down and earn more money or keep their income high”.
He added that a tougher element will be ensuring that everyone on the team has the right level of opportunity, and if they are underperforming “that needs to be handled quickly and fairly”.
Things are more tricky with non-fee earners however, though he noted that his firm has gone largely remote over the last year. “So rather than pay out more, we looked to save our staff costs which is like a massive pay rise as some travelled a fair distance.”
How to support young landlords
Sponsored by BM Solutions
Campo said that he intended to keep the headcount “steady” this year, though this may be reviewed later in the year “as I feel keeping costs under control this year will be a top priority for all firms”.
New bonus structures
Siobhan Holbrook, owner of Mortgage Light, said that she had come up with a new structure, providing bonuses on a monthly basis depending on performance and achievement. So long as they write a certain amount of business, and get reviews for the business, they will receive a £250 bonus, with a further £250 if they hit that target each month within a quarter.
She continued: “This is potentially £4,000 extra in bonuses to incentivise them to do better. If they can hit these targets, they will be hitting the minimum targets required of them which means I can be on track for what I need to hit as a firm.”
There will also be penalties in place (a £50 deduction), for example when compliance is not sorted within a certain timeframe.
However, for administrators, the firm is looking at implementing a five per cent increase.
Holbrook added: “I am definitely looking at the pennies and the pounds to ensure that whatever I am spending my money on, I am getting the return I expect for that investment. However, a tough market can create opportunity, and therefore I’m optimistic and hopeful for continued success for 2023.”
Attracting the best talent
Richard Dana, co-founder and CEO, Tembo Money, said that his business continues to look to recruit advisers, and noted that in order to attract quality brokers that means offering pay “at the higher end”.
He added that this recruitment drive meant the firm had a good idea of what competitors would generally pay: “We have a really good comparison on where our salaries are compared to the rest, and we’ve been able to continue to go above that.”
Dana explained that an element to Tembo Money which is different from other brokerages is that all team members have share options in the business, and said that as the firm’s valuation has grown over the last few years, some of the team will be sitting on “substantial” equity value.
He continued: “At this stage wage inflation has not changed our plans. We’ve slightly adjusted recruitment plans to reflect the Q4 2022 wobble, but so far this year things are looking pretty positive.”
Be careful what you wish for
Martin Stewart, director of London Money, said that brokers need to be careful about becoming too fixated on their earnings, warning that “the grass is not always greener elsewhere”.
He added: “I see many people hawking their carcases around the industry for a few extra per cent or the promise of unlimited leads only to then update their Linkedin profile again because the reality was never quite as good as what they were sold at the interview.
“A happy broker is one that works in a happy company, where everyone is working to make their clients happy, and monetary value is only one of many ways to gauge the success of that culture.”