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Authors: Suneel C Udpa
Published by: NACRA - North American Case Research Association
Published in: "The Case Research Journal", 2011

Abstract

Paul Lui has the difficult task of designing a new incentive compensation system for financial consultants at the wealth management division of a mid-tier financial services firm that has limited resources when compared to its larger rivals. The new incentive compensation system has to motivate the financial consultants to stay, perform, and excel; attract new consultants to fill in the vacated positions; and generate new business in the face of labor shortages and significant competition from larger firms. Paul's first task is to conduct a detailed benchmarking study to ascertain how the current compensation plan for its financial consultants compares with the compensation plans of other firms in the industry, both the large wire houses and the smaller regional firms. Paul has to make these decisions about incentive plans at two very different points in the economic and business cycle - during 2006-07, a period of unprecedented growth for the industry, and during 2009, when the financial industry was in an unprecedented state of crisis and turmoil. Should Paul take advantage of this turmoil in the industry to structure a compensation plan significantly different from what the competitors are offering? This could help his business grow and motivate his consultants to think more long-term, but it could also alienate financial consultants currently working at the firm and discourage new consultants from joining the firm.
Location:
Industry:
Other setting(s):
2007

About

Abstract

Paul Lui has the difficult task of designing a new incentive compensation system for financial consultants at the wealth management division of a mid-tier financial services firm that has limited resources when compared to its larger rivals. The new incentive compensation system has to motivate the financial consultants to stay, perform, and excel; attract new consultants to fill in the vacated positions; and generate new business in the face of labor shortages and significant competition from larger firms. Paul's first task is to conduct a detailed benchmarking study to ascertain how the current compensation plan for its financial consultants compares with the compensation plans of other firms in the industry, both the large wire houses and the smaller regional firms. Paul has to make these decisions about incentive plans at two very different points in the economic and business cycle - during 2006-07, a period of unprecedented growth for the industry, and during 2009, when the financial industry was in an unprecedented state of crisis and turmoil. Should Paul take advantage of this turmoil in the industry to structure a compensation plan significantly different from what the competitors are offering? This could help his business grow and motivate his consultants to think more long-term, but it could also alienate financial consultants currently working at the firm and discourage new consultants from joining the firm.

Settings

Location:
Industry:
Other setting(s):
2007

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