Honolulu: “My team has been doing well,” John stated after a recent keynote address, “But only a few of us are doing all the heavy lifting. We recently identified individual roles and responsibilities, but I don’t feel everyone is fully committed. What can I do to bring everyone up to speed?”

John is the team leader and rainmaker on a large wealth management team. The team was formed a few years ago and has gone through several different team structures. Recently, John re-organized the team to clearly define individual roles and responsibilities for each team member. As it stands today, the team is made up of John, two junior advisors, a practice manager, a client concierge and two administrative staff. All have been with the team at least two years.

As I probed deeper into the way John’s team works, I uncovered the following information:

  • The team has been experiencing a growth rate of about 10 percent annually. John’s increase in production accounts for nearly all of this.
  • The Practice Manager, Christy, is a former advisor and does a tremendous job organizing areas of responsibility, leading team meetings and tracking projects. She has a strong work ethic and is focused on the team’s goals.
  • The two junior advisors, Jason and Eric, joined the team with high expectations. While Jason appears dedicated to the growth of the team and is willing to work long hours, Eric seems more interested in his own compensation and will only work hard if it directly benefits him. However, Jason and Eric both receive yearly bonuses that are linked to the team's overall production.
  • The client concierge, Angela, is very well liked and has a great rapport with the team’s “A” clients She has shown an ability to uncover valuable pieces of information from clients that John has been able follow up on.
  • Meg, a client associate who has been with John for over five years, is well versed in John’s client service process. Sharon, the other support person, leaves much to be desired.

What John, Christy, Jason, Eric, Angela, Meg and Sharon are experiencing is quite common among wealth management teams. While roles and responsibilities are clearly defined, performance expectations are not. Some team members are not pulling their weight while others are busy picking up the slack. Is this beginning to sound familiar?

As team leader, John needs to direct and inspire his team. Part of this responsibility is determining a performance-based compensation structure that focuses on the roles, responsibilities and individual goals of each team member as well as the overall goals of the team.

John must link each team member’s individual goals and bonus structure to the overall performance of team. The objective is to establish individual performance expectations that are linked to compensation for each team member. This way, the less motivated team members will have nowhere to hide!

Let me briefly walk you through 7 steps you can use a starting point for establishing a performance-based compensation structure….

1. Identify clear roles and responsibilities for each team member. John has already done this.

2. Set annual goals for the team. This can include new assets gathered, clients upgraded, increase in production and increase in percent of fee revenue, among others.

3. Set individual goals for each team member. For Jason and Eric, this can be the number of new target-market clients, clients upgraded and production generated. For Christy this can be team meetings held on time, projects completed, and supervision of Angela, Sharon, and Meg. For the support staff this might be the number of complaints received, information uncovered about a client's personal interests, problems solved, etc. Track these results and/or activities throughout the year.

4. Determine the total bonus pool for the team.

5. Calculate the percentage of the bonus pool each individual team member is eligible to earn. This is determined by the team leader, who must assign a percentage value to each team member’s contribution—these conversations should be held in private with each team member. They don’t need to know the entire bonus pool; they need to know the team goals, their potential bonus number, and what is required to earn the entire bonus.

6. At the end each quarter, calculate the team's progress towards the annual goals and individual contributions, and distribute bonuses accordingly. (This can also be done annually).

7. Re-calibrate the bonus pool and individual bonus potential for the next year as you assess overall team goals and individual contributions.

John has been the engine driving his team for several years now. By identifying both individual and team goals and tying these to his team members' compensation, he will reward individual and team performance, and hopefully ignite the achievement drive of less-motivated team members.

As you can tell, creating a performance-based compensation structure requires far more effort than simply assigning a payout rate as a percentage of production (which can easily become an entitlement). Remember, an effective team leader must inspect what he or she expects—and reward accordingly.