The GTE Financial Services Association has released its first-ever report, which identifies key issues in the compensation of financial managers.
Among the major findings is that financial managers have a significant financial cost to their businesses, which can be estimated by looking at the ratio of total compensation to total assets.
That ratio is one of the primary drivers of corporate profits.
As a result, the GAAs report highlights that financial advisors and other financial professionals face significant financial burdens as the result of their compensation and compensation packages.
“There is no silver bullet for improving financial management performance,” said the GTEFSA’s President, John Boulton.
“But we believe that it is important to acknowledge the complexity of the financial industry, to acknowledge that we have some of the most sophisticated compensation packages available to the sector, and to recognize that we face the challenge of how to manage that complexity.”
“The GTESFA believes that the compensation structure of the industry is in some ways outdated,” Boulmont continued.
“In many ways, the financial advisors, as the market leader in compensation, should be compensated fairly.
However, we are also seeing a dramatic increase in the number of advisors with high compensation packages, particularly in higher-paying fields.
We believe that the best solution to address the issue of the disproportionate pay of advisors is for compensation packages to reflect that.”
The GAAs’ report also outlines the financial risks associated with financial management, including risk of market correction, market instability, financial distress, market failure and market overreaction.
“These risks are of particular concern to our industry,” Boudon said.
“For the financial professionals who make a significant contribution to the global economy, the challenge they face is that they are responsible for making a profit, but that is not enough for them to be able to survive financially.
The financial stress of these financial risks and their potential adverse consequences for financial markets, financial stability and the broader economy all require attention from regulators.”
As the GAOs report is now available, it is also available to view here: https://www.gte.org/news/the-gte-fsa-reports-financial-sources-costs-financiality-report/