The economist writes Cutting Back is Hard. A quote
A major source of profitability is client services, where employees’ contacts are invaluable, so retaining staff is crucial to survival. The valuable workers can actually go elsewhere, even now.
Now this may have made sense in the past where the Private Wealth Management Guys were selling all sorts of securtised products and banks were essentially hedge funds making money hand over fist over extremely loose monetary policy. But, going forward I don’t see how this could be true. These people were retaining clients because overall all assets were going up in price and so showing a good return was simple and even if the asset class underperformed you could talk it away by saying that the asset was of extremely low risk.
I would think let these relationship managers be compensated like any other sales people where typically the commissions that a person can earn are capped. Most companies in the real world have retrictions on sales compensation, I see no reason why it should not be the case in finance.
It was easy for these people to go out and sell products in rising market, let’s see how they fare in a downturn. Sales is easy when you can promise a full money-back guarantee, have a brand name behind you and essentially rising value of the product. These are not normal circumstances in most businesses, let’s see these people survive selling to sceptical customers, products which have a serious chance to lose money and no AAA-bought insurance and then reward them appropriately.