Financial planning salary survey 2013 - making a good job of it

Will the renewed optimism in the financial services industry bring on more jobs and higher salaries? What can financial planners hope for in terms of career opportunities? Andrew Tsanadis has the latest on employment prospects and salaries.

The new year has brought a level of optimism to the financial services industry and with it a renewed sense of confidence for hiring. 

The beginning of 2012 saw most of the sector slow down their hiring intentions but most recruitment experts agree that the December and January period – normally a down time for hiring – proved to be the busiest period they had seen in a few years. 

This industry normalisation, however, has increased pressure on employers to rethink their retention and talent acquisition strategies as professionals begin to feel more confident in making a career move. 

According to Profusion director, Alison Loader, people have accepted that the world has changed and career decisions still have to be made. 

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From a financial professional’s perspective this includes a renewed focus on leaving an organisation based on the possibility of career progression - more so than the offer of a more attractive salary, although this is still important.  

In fact, according to a recent survey by recruitment firm Robert Walters, around 80 per cent of professionals – in any industry - would leave an organisation due to lack of career progression. 

Many advisory firms are taking note of this by offering cross-training and up-skilling in a number of different areas – and it’s not just institutions and the major banks.  

Although industry consolidation is ongoing, boutique licensees are also investing more to not only train new recruits but retain talent as well.  

Age discrimination and sexism has long been a pertinent topic in the industry and while significant headway has been made in the past few years, the case has been made that more groups need to further develop equality.  

Institutions and dealer groups alike – most of whom have either reviewed or are in the process of restructuring their business models to meet the 1 July  start date of the Future of Financial Advice (FOFA) reforms – are once again seeking to acquire the best in financial planning and paraplanning, particularly those with strong change management skills. 

Big need for specialist skills 

Once again, there is an increasing need to hire experienced financial planners, but finding the level of skill required is still a massive challenge, according to Robert Walters’ finance and banking operations consultant Pamela McDonald. 

She said that compared with the start of January 2012, a lot more financial professionals are becoming active in their search for job opportunities – but not all candidates are created equal. 

“If you have a strong reputation and you’re good at what you do, you’re across legal requirements, you’re charging a fee for service and you’ve been doing that over a period of time, you’re always going to be in demand,” Loader said. 

“People who’ve worked in project management within financial services – and particularly those who have worked around FOFA and process management – are in high demand.” 

With so many projects being undertaken by both bank-aligned and independent firms, Loader said daily rates would be high for those individuals. 

According to its latest research, Hays Banking found that an associate planner might earn between $65,000 and $75,000 while a qualified financial planner could bring in anywhere between $85k and $110k. 

While bonuses are back on the table, recruiters say they will not be at pre-GFC levels. 

Along with the requirement for financial planners, there is also a major need for paraplanners to stay on in their roles in order to cultivate their technical skills, Hays stated. 

Paraplanners could expect to earn a base salary between $55k and $75k, while those with experience could earn between $60k and $80k.  

Despite the “subtle” increase in paraplanner salaries over the last couple of years, Hays Banking director Jane McNeill said the current level is not in line with current market demand and she doesn’t expect this to change in the near future. 

“I’d say that paraplanning as a profession is growing - four or five years ago it would have been much more difficult to find a career paraplanner than it would be now,” Loader said. 

“If you’re a career paraplanner and you’ve got very strong technical skills, you could expect to earn a pretty decent salary, much more so than it has been in the past.” 

With the growth of the ‘one-stop-shop’ model, there seems to also be an increasing demand for mortgage candidates, particularly professionals with a background in mortgage broking, support and compliance, Hays stated. 

Its research also pointed to the need for more phone-based advisers, which McNeill said is very much the result of the cost-consciousness of most organisations rather than the continued build-out of scaled advice models, although scaled advice is still a growth area. 

“We have seen an increase in the use of temps this year and they are in those phone-based roles but also support roles - not generally in front-line sales roles, but in any of the support functions, whether that be client services, administration and paraplanning to some extent,” she said. 

According to McNeill, without a dedicated pool of candidates, Hays might have between 20 to 30 insurance roles advertised at any one time, particularly in the areas of underwriting. 

Such is the desire for quality underwriters that Robert Walters 2013 Global Salary Survey found that salaries in this field are expected to increase by up to 9 per cent this year. 

Management accountants are also expected to see an even larger pay increase of 12 per cent, according to the report. 

McDonald said a major trend she had noticed concerned accountancy firms increasingly looking to build out financial planning arms in order leverage the technical skills they can bring to the client relationship. 

“The accountancy firm can have their separate side where they can give clients advice on taxation, but then they’ve got their financial planning models as well to cover the other areas that they feel they need to,” she said. 

For eFinancialCareers head of Asia-Pacific George McFerran there is a clear demand for professionals with risk and project management experience, as well as for people with information technology and systems skills to assist in the areas of compliance. 

Despite FOFA being just on the horizon, McFerran said financial services groups across the industry are still in the process of building their support functions. 

“It doesn’t necessarily mean organisations are wanting to hire lots of people in those particular areas but there is still demand,” he said. 

According to McDonald, there is definitely a separate niche away from financial planning for candidates with skills on the credit analysis side within mortgages. 

“This means people who have delegated lending authorities, who can actually make the decision on loan approvals,” she said. 

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Training and support 

According to McDonald, there is a shortage of solid graduates coming through to take on scaled advice within financial services. 

She said this is particularly true for candidates who have some finance experience through their RG146 and university studies.  

For McFerran, one of the greatest challenges the industry faces is around education, with financial services continuing to suffer from a lack of quality candidates. 

With the build-out of scaled advice capabilities continuing into 2013, McDonald said it presents a real opportunity to entice graduates to kick-start their career in the industry. 

“From speaking to clients that are focusing on the scaled advice space, the roles are either permanent or fixed-term contracts,” she said. 

“With the fixed-term contracts their view is to make the roles more longer term - it’s seen very much as a career path.” 

After gaining exposure for candidates to different products and getting their skills up in terms of sales, McDonald said the plan for most advisory groups is to move these candidates onto the financial planning path after 18 months. 

“If you look at scalable advice it’s such a great training ground, so a lot of firms are happy to look at - not particularly candidates that have come through graduate programs - but essentially putting them through their own graduate financial planning program themselves,” she said. 

“They go to a lot of trouble to bring these guys on board, they don’t want to lose the experience and they recognise that they need to support them by giving them development.” 

Loader agrees, adding that the renewed trend is a central component to most financial services firms’ succession planning strategies, with the AMP Horizons Academy being a notable example. 

McNeill said she hasn’t seen any significant changes to most businesses’ training programs because most are on the lookout for experienced professionals. 

“They train a certain number of people but not nearly the numbers they need to keep the market going,” she said. 

With most of the industry making improvements to their processes under the new regulatory regime, McDonald said a number of planners are taking it upon themselves to undertake Lean Six Sigma course work – a project-specific training qualification. 

In support of another trend in the industry, The SMSF Academy recently partnered with Money101 to launch an online self-managed superannuation fund education program for financial planners and accountants. 

According to The SMSF Academy director Aaron Dunn, the course has been developed to comply with the SMSF Professionals’ Association of Australia’s education guidelines. 

He said the training provides practical examples to enable users to better understand the current regulatory framework. 

Employer sentiment 

Financial advisory groups have been working hard to drive down costs in preparation for the many uncertainties that lie ahead. 

According to a recent Hudson report, 60.8 per cent of the financial services industry remains steady on headcount in the first quarter of 2013 while 27.2 per cent have plans to ramp up their hiring plans. Only 12 per cent had plans to decrease headcount. 

McFerran said wealth management businesses have a lot more confidence in their business plans than they did at the beginning of last year, due largely to improved macro conditions. 

“We’re still hearing from our clients that cost-control is still very much an issue across the board,” he said. 

“While employers didn’t really know what their business plans were going to be last year, they’re a lot more certain now.” 

Although headcount will once again remain flat this year, McFerran pointed out that both boutique advisory firms and bank-aligned groups will be looking to attract talent to bolster revenue-generating business lines. 

This desire to remain competitive has also driven the need for professionals who can help businesses deliver advice in a more effective way.  

This means focusing on their value proposition and honing in on developing a stronger customer-centric approach, according to Loader. 

She said firms are currently asking themselves whether their processes, documents and systems actually support what they’re trying to achieve in relation to customer engagement. 

“A lot of the focus has been on recruiting people who’ve got really solid advice experience, people who’ve worked in a head office environment or people who’ve looked at various aspects of the advice process rather than being completely focused on one,” she said. 

Recruitments experts agreed that employers want candidates who can match the specific qualifications and experience criteria they are seeking. 

“On the flip side of that, candidates are still pretty cautious when it comes to that kind of thing - they will also want to make sure they’re moving into the right job. They want to make sure they’re moving into something that fits their skills, and that the organisation has a long-term plan around their business or a particular project,” McFerran said. 

As the last 12 months have shown, some advisory groups are even keeping an eye out for professionals outside of the financial services industry. 

According to McFerran, the trend has been less about targeting individuals from particular industries and more focussed on recruiting people based on their life experience in order to bring some credibility to the client relationships. 

What candidates expect 

A recent study by Profusion asked 2,310 banking and financial services professionals if they would “be open to new opportunities in 2013” and a resounding 62 per cent (almost two-thirds) said they were willing to make a move for the right opportunity. 

According to Profusion Group associate director Cholena Orr, there are a lot of opportunities for planners at the moment. 

“At this time of year there’s a lot of ‘deckchair’ movement. The big four have similar strategies – they will hire into areas like call centres and paraplanning teams and ‘grow their own’”, she said. 

McDonald said one of the main reasons for planners leaving their current employer is lack of career progression.  

She said some of this has continued through the industry since the global financial crisis when there was a hold on internal progression. 

“People are feeling a bit stagnant in terms of career progression. They are more realistic now that it’s not just about salary - there has to be other reasons why you’re looking to move,” she said. 

“Since the end of the last quarter, a lot of firms have been trying to combat that by doing cross-training and up-skilling in different areas – so it’s not just purely salary-based.” 

Hays found that senior professionals with large books of clients are being drawn to independent firms that seem to have more direct support and less key performance indicators, forcing the major banks to focus on their succession strategies. 

McNeill said the professionals that institutions value the most are being offered more flexible work contracts and retention bonuses  - albeit modest in the current environment - to keep them on. 

However, McDonald added that even the smaller firms are recognising the importance of keeping skills in-house and managing their headcount. 

“A lot of employers have been offering fixed-term contracts to candidates, which obviously gives candidates the benefits of working like a full-time employee,” she said. 

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Knocking down the barriers 

The need for greater diversity has been a recurring theme in the industry for many years, but there is still a way to go for most financial services organisations. 

“I think the industry is pushing – they’re saying a lot of the right things but it’s yet to drip through organisations and become something that they do,” McFerran said. 

Between September and October eFinancialCareers polled 309 employed finance professionals living in Australia and found 64 per cent of Australia-based finance professionals claim that gender discrimination takes place in the industry. 

On a gender basis though, more than 80 per cent of women say it does exist compared to only 54 per cent of men. 

“The industry has already lost some of its gloss in recent years, but if women’s perception of gender discrimination in financial services is as bad as they report, then companies will continue to struggle to attract women into the industry,” McFerran said. 

Highlighting the discrepancies in achieving equality, 38 per cent of men in the survey cited ‘flexible working arrangements’ as the number one step in the push for effective policy while women’s top answer was ‘mentoring and sponsoring’ (25 per cent), followed by cultural change (18 per cent). 

Financial Executive Women – a Financial Recruitment Group initiative – said the most common reason why women are overlooked for promotion is because they simply fail to apply for roles or promote their credentials to their employers. 

Most women reject the idea of being given a role simply because the company wants to increase its quota of senior executive women, Financial Recruitment Group managing director Judith Beck said. 

“When I quizzed women at the firms on why they had not applied, they would usually say it was because they did not think they ticked all the boxes in terms of skill set,” she said. 

“Women need to stop waiting to be tapped on the shoulder and offered the job.” 

In another finding in eFinancialCareers’ diversity survey, more than half of respondents acknowledged that there was ongoing age discrimination taking place throughout the industry, particularly when it came to older workers. 

While around 80 per cent of respondents said workers aged 30 and under were valued by their company, only two thirds could say the same for workers over 50. 

According to McFerran, there was a strong argument for financial services companies to adopt strategies to retain older workers largely because of the client referrals and credibility they can bring to a business. 

The need to recruit younger professionals is also concern in the industry and dealer groups are currently in the process of reducing the average age of their planners to “future proof” the business. 

Faced with the prospect of a majority of their authorised representatives either retiring or passing away, Synchron director Don Trapnell recently told Money Management the dealer had lowered the average age of its advisers to 49 in 2012 and currently has more than 80 under the age of 40. 

On an industry-level, the Financial Planning Association is trying to address this issue with membership categories specifically targeted at students and aspiring planners, while the Association of Financial Advisers’ GenXt program is solely focused on supporting advisers who have been in the industry for less than three years.

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What the rest of the year has in store 

Although cost-cutting is still important for both boutique and bank-aligned dealer groups, more groups are starting to emerge from the shadow of caution that hung over the industry for the past 12 months. 

The increasing number of talent returning from overseas markets has also underlined the renewed vigour for increasing the headcount in the Asia Pacific as a whole, according to McFerran. 

“We have noticed there’s been an increase of Australians in Hong Kong and Singapore applying for jobs in Australia,” he said. 

“That’s really attributed to another trend that we’ve seen, which is historically a lot Australians used to apply for a lot of jobs in the United Kingdom - the UK has dropped in popularity and more people are applying for jobs in Hong Kong and Singapore.” 

With the implementation of regulatory change ongoing until the start of July, professionals with process and change management in particular will continue to be highly sought after, at least over the next quarter, Loader said. 

Industry consolidation is continuing - but recruitment experts say there will always be opportunities for professionals with solid experience and a strong book of clients.