Costs of Compensation: Sales and National Accounts

2009

Aug, 2009

2

Crisis – Disaster or Opportunity?

+ In the past two years: The market declined over 50% from its peak in October, 2007 to its trough in March, 2009

(and then rebounded) Financial regulation and threats of increased oversight fundamentally altered the rules of the

game Mergers changed the power balance and the identities of key players in the financial

industry Plagued by scandal, Wall Street suffered significant damage to its public image

Change, Change – All About the Changing Landscape

How firms are responding to change+ Duck and Cover (33% of firms)

“Let time pass” approach

+ Across the Board Cuts (45% of firms) Problems of the day are too serious to duck and cover, so… Some changes in order to feel that they are doing something constructive in response

+ Opportunistic Rationalization (22% of firms) Recognizes that change may not be transient Seizes crisis as opportunity to make needed, strategic changes

3

How Firms Are Responding

2008 was a tough year…except for Internals/Hybrids

+ Compared to 2007, total compensation dropped 10.3% on average in 2008

4

Big Picture – The Numbers

Notes:1.Internal and Hybrid role largely shielded from huge declines due to lesser percentage of total pay being variable2.Some firms have changed people in certain roles, lowering their cost structure and putting downward pressure on numbers above3.Several firms provided only Total figures, or only Base and Variable. Consequently, Total, Base, and Variable figures should be viewed independently. For the whole population, Total does not equal Base plus Variable.

2009 looks to be (somewhat) improved+ Prospects in 2009

Uplift for all roles, vis-à-vis 2008 2009 compensation still projected to be lower than 2007 numbers by 6.8% , on average

5

Big Picture – The Numbers

Notes:1.National Accounts is taking on more prominence at some firms; compensation for these roles is converging higher towards Sales roles2.Hybrid roles are evolving at several firms; compensation for these roles is moving higher to reflect higher level expectations and duties3.Several firms provided only Total figures, or only Base and Variable. Consequently, Total, Base, and Variable figures should be viewed independently. For the whole population, Total does not equal Base plus Variable.

Internal Wholesalers – Base compensation actually increased, and projected to stay flat

6

How Sales and National Accounts are Compensated

Internal Wholesalers – Variable Comp. steadily increasing

7

How Sales and National Accounts are Compensated

Internal Wholesalers – Total Comp. rises

8

How Sales and National Accounts are Compensated

Internal Wholesalers – Continued Increases

9

How Sales and National Accounts are Compensated

Recommendations

In order to adapt to change and insure that your best sales folks stay fully engaged:

+ Rationalize intelligently to ensure reasonable pay and keep the best people happy

To reward smart investments of time and effort given to long-term value creation:

+ Incentivize productive activities, not only end results

To insure that sales organizations are aligned with overall firm objectives:

+ Tie sales comp. to firm profitability

10

Best Practices & Recommendations

11

About kasinaOur firm has a singular mission: Innovate distribution in financial services

About kasina

For more information, please contact:Eric DaughertyDirector of Researche-mail: edaugherty@kasina.comphone: 646 257 4465fax: 212 349 7413

For information regarding purchase of the full study, see http://www.kasina.com/Page.asp?ID=991