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Are Sales Goals Dead?

Sales goals were the scapegoat after John Stumpf’s brutal congregational testimony in late September.  Would his plan to eliminate sales goals have solved the problem?  We think there are many more important problems that need to be addressed.


Sales goals are established by senior management to meet shareholders’ profit expectations and they are embedded in compensation plans to reward client-facing professionals if they meet these goals. At the end of the day crafting a sales-oriented solution is a Catch 22. 

Establishing compensation plans is an art that is led by HR professionals with the input of senior executives. In complicated financial services companies, both roles have become increasingly important. I always wondered why my bosses at Bank of America were joined at the hip to their HR executive. Now I get it, and the new regulatory initiatives are only going to strengthen this bond.

The complexity doesn’t stop there though. Each client-facing department has a unique compensation plan! These are dictated by the market, and thus changing them can cause attrition as professionals make the decision to change firms and provide the same services for higher compensation. Sounds like a Catch 22! 

The final item to add to this toxic mix is the compensation of the senior executives. Senior executive compensation has risen much faster than compensation for the average employee. Their compensation plans are established by their boards and validated by “outside” consultants who use peer statistics to insure that their clients retain senior executives. Sounds like the mindset used in setting client-facing employees’ compensation plans. What a mess!

Products and Services

Another problem is the products and services that financial services firms offer clients. Many are so complicated that they require an educated professional to explain and “sell” them. Embedded in these complicated structures is where the profit margins live. The recent DOL ruling identified this reality and mandated a solution. Many other services that financial services firms offer have been commoditized, and since free toasters no longer do the trick, sales goals and advertising have taken their place. Maybe the products and services aren’t that great. Internet disrupters are betting that is the case.

Cost Structure

Finally the voracious acquisitive appetite of financial services firms has created gargantuan concerns with hundreds of thousands of professionals who are in still in love with their old firm and don’t embrace their current company. This creates a management problem of “who is with me?” The other reality of the acquisition binge is the acquiring company needs to reduce expenses to achieve their stated financial goals. Many corporate executives have climbed the corporate ladder by being great cost cutters. That gig is up and now executives must focus on growing the top line by increasing cross sales. 

The CEO’s job of managing all of these issues is difficult if not impossible. However, the buck does stop at the top and leaders and their boards need to wake up and smell the coffee. They should start by changing compensation metrics to benefit the client. Firms need to address this issue as soon as possible before Elizabeth Warren does it for them.

Jeff Spears is founder and CEO of Sanctuary Wealth Services, champion of the independent advisor and author of the acclaimed blog, Wealth Consigliere. Follow Jeff on Twitter and Facebook.

TAGS: Industry
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