Compensation Structure & Expenses for Retail Investment Services Employees

Determining the performance of retail investment programs enables credit unions to improve value to members and the bottom line.


Regardless of how credit unions have structured their investment services program (i.e. as an outsourced managed program or an internalized dual-employee program), effectively managing a retail investment program for members is becoming increasingly important given demographic shifts and the range of available options. Callahan & Associates and Snyder Consulting Solutions surveys broker-dealers and credit union programs each year and publishes a study on the state of credit union retail investment services programs.

Financial consultant (FC) compensation plans are designed to incent productivity and performance. They generally consist of a base salary and commission based on monthly levels of gross dealer concession. The commission component, or at-risk pay, is the largest component of total compensation.

Natural fluctuations in performance create varied compensation expenses; however, the goal of a retail investment program is to increase gross revenues at a faster pace than the variable compensation expense. Doing so will result in an incremental increase to the program’s net income ratio.

Compensation expense is the largest component of the financial model for both broker-dealer and dual-employee programs. Therefore, it is critical compensation models are periodically reviewed to ensure they are competitive and fair for all parties. This review process will result in a higher retention of FCs and reasonable gross income margin for the program.

The total average compensation for FCs in the various program structures included in the Callahan/Snyder survey ranged between 31.2% and 34.5% of Gross Dealer Concession (GDC) with an average base salary for FCs of $17,761.

For the dual employee structure, FC salaries were 25.4% of total compensation with the variable component (incentive/commission/bonus) comprising 74.6% of total compensation. For broker-dealer programs, FC salaries represented only 6.3% of total compensation with a variable component of 93.7% of total compensation.

Although the average salaries were not dramatically different between these two groups, the broker-dealer programs' level of production was significantly greater. As FC compensation is variable, greater amounts of GDC result in increased levels of the at-risk component of total compensation. As such, the salary becomes a smaller ratio of the total compensation for FCs.

In many cases, credit unions have had their investment services programs for more than 15 years. Their overall staffing models have evolved to provide service and support to an increasing number of member/clients each year. Hiring additional staff normally generates concerns about increasing fixed expenses without corresponding revenue growth. In recognition of those concerns, the primary staff expansion in investment services programs occurred in the licensed areas rather than unlicensed or administrative staff.

Associate FCs and licensed sales assistants provide a broader range of services and account support capabilities to members. They can also generate production and new account activity where appropriate, thereby generating revenue to support their own positions. Furthermore, the support they provide allows the program’s FCs an expanded ability to focus on new business development, which increases overall program productivity and performance.




Feb. 21, 2011


  • Good detail and commentary to provide those CU's with Investment programs a framework for comparison and potential improvement to our own programs
    Mike Mastro