New York City-based consulting shop kasina
is advising fund firms to tweak compensation models for internal wholesalers
to reflect their evolving role. Specifically, kasina is recommending that bonus compensation account for 15 percent of total comp.
In a recent study, Excellence in Distribution: Internal Wholesaling 2009
kasina found that 55 percent of compensation is derived from base pay
and 45 percent stems from variable comp. Of the 45 percent, 37 percent
is based on gross sales while bonuses account for 7 percent.
kasina polled sales managers and interviewed executives at close to 40
asset management firms. Julia Binder authored the report.
"The role of the internal wholesaler is evolving at a lot of firms," said Eric Daugherty
director, in an interview. "It was more administrative in the past and now it's more sales and service-oriented."
However, the current compensation structure "does not align with what asset managers say they value
in internal wholesalers," he said.
Asked what they value in internals, fund firms mentioned number of calls made, teamwork and
product knowledge, among others. As for sales, it came in sixth.
kasina recommends that internal wholesalers' base pay account for 53 percent of total
compensation, and that commissions account for 32 percent and bonuses 15 percent.
"The increase in bonus compensation to 15% enables enables managers to incent activities that benefit the
firm such as up‐selling and cross‐selling, updating the CRM, and using technology to enhance communications with advisors. Individual performance and performance against peers should be measured, communicated and rewarded regularly using scorecards outlining goals and metrics," the report read.
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