2019 Compensation: RBC Reinstates 401(k) Match, Keeps Grid Unchanged
RBC Wealth Management told its approximately 1,800 brokers this week to expect few changes in compensation formulas for the 2019 fiscal year that begins next month, but gave them a retirement account boost.
The Minneapolis-based U.S. brokerage unit of Royal Bank of Canada is restoring a 401(k) match that was withdrawn in the aftermath of the financial crisis for upper-level employees, including financial advisors, according to several branch managers.
“It’s not a game-changer, but it’s a positive,” a midwestern RBC Wealth official said of the reinstated match, noting that he recently spoke to a recruiting prospect who asked about it.
Just over half of the 49% of U.S. employers that offer 401(k) plans have a match feature, according a 2015 study from the Bureau of Labor Statistics, but the match has much wider use among U.S. brokerage firms.
RBC’s restored program will match up to 6% of an employee’s contribution to a company retirement plan, to a maximum of $1,500, according to the manager and two other RBC Wealth-U.S. employees, who spoke on condition of anonymity.
The bigger compensation picture is not changing much at RBC Wealth-U.S., which has its origins in the Canadian bank parent’s purchase of Dain Rauscher Corp. in 2001.
Revenue grid breakpoints and payouts to brokers, which range from 20% to 50% of fees and commissions produced depending on total production in qualified accounts, will be unchanged from this year, the sources said. Several competing firms, including Raymond James Financial, Morgan Stanley and UBS Wealth Management USA, have already told brokers that they will not be rocking the boat in 2019 by changing revenue tier and grid levels.
Morgan Stanley, however, is making significant changes in the way it calculates performance bonuses to encourage brokers to adopt client-monitoring technology and prepare financial plans.
RBC Wealth-U.S. had earlier told brokers that it will cut payouts on small household accounts of $100,000 and less in fiscal 2019 and incentivize them through cash bonuses to refer the accounts to new call centers that are being marketed as RBC Advantage centers.
Brokers who do not make the referrals will receive a penalty payout of 10% on small accounts they retain, the sources said. RBC Wealth is, however, capping the total amount of penalty-rate compensation and offering household-accounting variances to help avoid the penalty.
An RBC spokeswoman declined to discuss the 2019 compensation plan and the RBC Advantage payout specifics.
Separately, the firm said on Friday that it recruited a team of four advisors and two registered client associates from Robert C. Baird. The group, whose brokers include Paul Westphal, Tyler Briggs, Blaine Gibson and Olinda Ayala, are based in Mequon, Wis., and had been managing more than $280 million in client assets at Baird, RBC said in a news release.
Westphal, the senior broker, has been an advisor for 30 years, with stints at Lehman Brothers/Smith Barney, Piper Jaffray and UBS before joining Baird in 2010, according to his BrokerCheck history. The team will work under Milwaukee complex director Doug Artus.