Advisor | July 2023
The sheer amount of liquid assets on checking accounts and the simultaneous rise in rates recognized by the ECB have been enabling banks to accumulate large margins, as testified by the record-breaking results across the whole system.
In addition to the distribution of profits, there are two main target areas: digital innovation and incentives to bank employees.
While banks did not agree with Intesa Sanpaolo’s decision to revoke the mandate for representation to Associazione Bancaria Italiana with regard to contract negotiation, the issue remains relevant.
The level of satisfaction of bank employees with their remuneration is much lower compared to financial advisors, in terms of both fixed and variable remuneration.
The key point is increasing the salary of all bank employees or introducing a merit-based reasoning to incentivize and motivate the most deserving employees.
While financial advisors are paid depending on their individual ability to manage their client portfolios, bank employees are bound to the results of their branch, area, or division.
In other words, if one or more links of the chain is weak (that is, they do not achieve the expected results), all others will in turn be penalized regardless of individual merits.
This, of course, applies to all people working as employees as opposed to independent professionals. However, the issue is particularly cogent when it comes to the sector of financial consultancy given the current acceleration of the dynamics at work.
Indeed, over the past ten years the market shares of distribution channels in the financial portfolios of Italian families (deposits, administered investments, managed products, insurance and pension products) attributable to the traditional banking sector have decreased by 19% as compared to the doubling of financial networks.
It is worth underlining that, in absolute terms, the value of the financial portfolio of Italians managed by banks has increased (+33% 2010 vs. 2022), however the relative share has decreased.
In addition to remuneration, the level of satisfaction of bank employees with their banks is significatively lower than financial advisors with respect two three variables.
The most critical areas are: the ability to involve employees and support them with more training and communication, the offer of investment products (both for range and quality) and digitalization (both for procedures and equipment).
In particular, younger bank employees tend to be more critical than their colleagues over issues pertaining to remuneration, digitalization, operations, training and the level of support offered by the bank when it comes to both trade and product advisory.
In addition to the economic aspects, investing in procedures and digital platforms will be of key importance in order to attract and keep bank employees with high potential. This, in addition, will free them from low added value activities, allowing them to exercise their profession optimally.
Nicola Ronchetti