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Written by: Jack Giardino | Inflection Point Wealth Advice
Negotiating compensation can be one of the most important and stressful parts of your career as a young financial planner. Let's be honest, we all want to ensure we are compensated accordingly for our work, but these conversations can be tough to navigate, especially early on in our careers.
As an individual who has been on both sides of the table, as an employee successfully negotiating for higher compensation, and as an employer working to provide solutions during compensation negotiations, I have created a five-step guide to help young financial planners confidentiality navigate their next compensation review.
Understanding Your Boss’s Perspective
I believe the first step in preparing for your next compensation review is to start by putting yourself in your boss’s shoes. It’s important to recognize that your boss, manager, or supervisor has numerous responsibilities and may not focus on your compensation as much as you do.
Your goal should be to present your request for an increase in compensation, in a way that aligns with their priorities and makes the decision a “no-brainer” for them. A few items to think about include:
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Goal Alignment - What are the long-term goals of your firm? How can you demonstrate how your achievements support these goals and in turn make your request more compelling?
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Decision Fatigue - Your boss, manager, or supervisor is likely constantly making decisions. Simplify your proposal to reduce the mental effort required from the decision maker.
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Prepare for Questions - What pushback or questions might your boss have? Think through these ahead of time and include them within your original proposal.
It’s important to realize that the majority of bosses want to see their employees succeed. There might be confines they are stuck working within, but I promise they aren’t “out to get you”. Put yourself in their shoes and come to the table in a collaborative manner.
Market Research
The second step in preparing for your next compensation review is conducting market research to gain a better understanding of the range of compensation earned for similar positions to yours. Luckily for you, our industry has great resources to help make this research easy.
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CFP Board Compensation Study - The CFP Board has numerous resources that break down compensation trends within the entire industry.
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Charles Schwab RIA Benchmarking Study and Compensation Report - If you fall within the RIA side of the business, this is a great resource to dive into.
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Job Boards - Search the Financial Planning Association Job Board, CERTIFIED FINANCIAL PLANNERTM Job Board, LinkedIn, or other local job openings to get a gauge for compensation ranges.
After you have conducted your research, build out an income range for what you believe your position might be worth based on the data you reviewed. Make sure to detail the reasoning for why you believe that income range is accurate.
Evaluating Your Worth
The third and arguably the most difficult step in preparing for your next compensation review is evaluating your true worth. Although we might all like to think we are in the top 1% of our peers, it’s important to have a sobering conversation with yourself to truly identify what your market value is. Here are a few items to help identify your value:
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Advisor Shortage Looming - Likely to see 37.5% of advisors retire in the next decade. (Cerulli, 2023)
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Rookie Advisor Failure - 72% of rookie advisors exit within the first five years. (Cerulli, 2023)
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Quantify, Quantify, Quantify - Track anything that shows you have added value and are in the top 1% of your peers! Track meetings you have led, outbound calls you have handled, additional revenue added to the firm or book of business since you joined, etc.
Out of the gate, young financial planners have a gust of wind at their back due to current industry dynamics. It’s important to not solely rely on those dynamics and truly understand what your worth is within the financial planning industry.
It’s Not All About The Money
Although we would all like to make more money, there is still plenty of time left in a young financial planner's career to earn larger wages. If higher compensation might not be on the table, what are alternative benefits you could ask for?
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Mentor-Mentee Relationship - Can you ask for more one-on-one time with those you directly report to deepen your financial planning and industry knowledge?
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Work Flexibility - Are there adjustments that could be made to your schedule that would help make your life more enjoyable while increasing your work efficiency?
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Continuing Education Reimbursement - Are there conferences, additional certifications, or other continuing education opportunities you’d like to pursue that could benefit both you and your employer?
One of, if not the most, important thing to focus on as a young financial planner is developing YOU! There are plenty of ways to continue to develop yourself as an advisor that can help increase your potential earning opportunities down the road.
Timing Your Negotiation
The fifth and final step in preparing for a successful compensation negotiation is identifying the right time to have this conversation. If your firm has a set time of the year when compensation is reviewed, then you are all set! If not, you want to be strategic on when you request to have this conversation.
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Set a Formal Meeting - Make it known that you’d like to have a formal discussion regarding your compensation, don’t blindside your boss.
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Leverage Wins - Utilize milestones and big accomplishments to your benefit. It can’t hurt to have these conversations when everyone is on a high note!
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Come Prepared - Utilize the four steps before this one and come prepared with a one-page agenda that helps make the decision a no-brainer for your boss.
Once you have found the right time to hold this conversation, try and make this an annual discussion. It’s important that you continue to vouch for yourself throughout your career.
Final Thoughts
Follow this five-step guide to confidently approach your next compensation negotiation so you can continue your personal and professional growth within the financial planning industry.
Remember, negotiation is not just about asking for more, but demonstrating why you deserve it and how it benefits both you and your firm. I wish you the best of luck in your next compensation review!
Jack Giardino is a CERTIFIED FINANCIAL PLANNERTM professional and President-Elect with the Financial Planning Association of Greater Kansas City. He serves as an Advisor and Director of Planning for Inflection Point Wealth Advice in Overland Park, KS.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.