Banks are paying more to representatives who sell investment products, despite other employees' objections, according to a survey by Bank Insurance Market Research Group.
The study found banks' sales representatives who specialize in selling mutual funds and annuities now receive an average of $63,000 a year.
"Average compensation figures are growing, as well as compensation for star performers," Andrew Singer, managing director of the Mamaroneck, N.Y.-based research group and author of the study, said in a telephone interview.
Many sales representatives in banks are raking in six-figure salaries, the study showed. Six of the 44 depository institutions polled said that their top dedicated salesperson earned over $200,000 in total compensation in the past 12 months. And nearly 16% were paid over $100,000.
Each representative sells an average of $200,000 to $250,000 worth of investment products yearly, according to David Nadig, a consultant with Cerulli Associates, Boston. "That's very close to the industry average," Mr. Nadig noted.
Compensation can be in the form of a straight commission, a base salary, or a combination. Bank-based salespeople "now have the opportunity to make the same amount of money as people in the wirehouses," Mr. Nadig said.
Haves and Have-Nots
Although that may be good news for banks that are trying to woo reps away from brokerage firms, not everyone is happy.
The salaries of investment product salespeople are a problem, said Ronald A. Aalseth, president and chief executive officer of Commercial Federal Investment Services Inc., a subsidiary of Commercial Federal Bank, Wheat Ridge, Colo. "We tell them not to drive their Mercedes to work," he said.
The study found that "sales specialists who sell mutual funds out of branch lobbies and earn more than their local branch managers may stir envy and spread resentment throughout the retail system."
When a salesperson is making $100,000 and a branch manager is paid $40,000, "it can be a source of friction," Mr. Singer said.
However, while 56% of respondents reported "some resentment" over highly paid salespeople, not one said it was a "real problem."
It's also "not anything particular to the banking industry," said Michael Pfeifer, manager of the investment services department at First National Omaha.
One way to eliminate resentment over pay is to compensate sales representatives primarily with a base salary. At First National Omaha, for example, 80% to 90% of compensation is salary.
Mum's the Word
"You're not going to see the reps driving their Mercedes to work, because they can't afford them," Mr. Pfeifer said.
Another solution is to keep quiet. At Indiana Federal in Valparaiso, for example, most employees don't know how much salespeople make, said sales manager Kathleen Bradshaw. "If they did, there would be many more unhappy people," she added.
In addition to polling depository institutions on compensation issues, the questionnaire also covered sales representatives' backgrounds.
Nearly 40% of respondents reported that their sales specialists came from wirehouses or brokerage firms. However, over a quarter of those polled said salespeople came from another bank investment program.
"This suggests the growing pool of bank employees with a specialty in the area -- something that wasn't evident several years ago," Mr. Singer said.
"There's a tremendous need for bank reps who are experienced in the bank channel," said Cerulli's Mr. Nadig. Unlike brokerage firms, "most banks don't have the luxury of training people up from the bottom" because of high costs, he added.
The institutions surveyed ranged in size from $450 million to more than $90 billion in assets. About two-thirds of the responses came from commercial banks, and a third came from thrifts.