How to Communicate Your Year-End Bonus Decisions

Beverly Flaxington

Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.

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Dear Bev,

This has been a good year for our firm – the markets have done well and we have benefited. My staff is angling for strong bonuses this year as a result. But I would like to invest some of the money into the firm. There are updates to technology I want to make, among other things. While revenue looks great, the profitability was not as attractive. I don’t think I owe my staff an explanation about what I am doing with the money, but I know they think I am taking it for myself and being unfair to them. Is there a proper way to communicate bonuses and profit for an advisory firm?

Name withheld

Dear Financial Advisor:

Why are you asking this question at the beginning of December? Do you not have a clear guideline about bonuses that you – and your staff – understand? Your staff wants to know what they will get paid, and they want to be paid according to their efforts. This confusion isn’t good for morale – and clearly you have angst over it as well!

Please make a resolution for 2014 and beyond to implement a compensation plan that is clear and known to everyone. Even bonuses with qualitative components should be outlined well in advance.

Communication is imperative. Call your staff into a room and talk to them about the company’s performance. Don’t share details you don’t want to share, but let them know it has been a good year, tell them how much you appreciate them and let them know you are planning to invest in the firm. This is good for them. It will make their lives easier and make the work more efficient. (I am making some assumptions here about the technology you are referring to!)

Then, have a conversation with each individual to talk about his or her performance. Be specific in your comments. Let them know what they are doing well and what you’d like to see improved. Let each person know how you are calculating any bonus – or if an employee is not receiving a bonus (and they expected it), let him or her know why.

Being clear around compensation is so critical that I cannot underscore it enough. While people are motivated by different things, most want to feel they are fairly compensated for the work they do and they want to be able to tie their compensation to their performance. Being vague and unsure around this topic is not good for anyone.

Dear Bev,

Can you offer some tips on managing time more effectively?

Blake A, Washington

Dear Blake:

How much time do you have to read my answer? There are many ideas I could give you, but first you need to start by identifying where your time goes.

Start by keeping a log of what you do every 15 minutes. I have had clients tell me that just the discipline of tracking time has helped them to think twice about what they do and how they do it. Once you capture what you are doing, go through the log line by line and highlight those things that were not most important – things that you should have either delegated or said no to! Once you start to see how your time escapes, you will become more aware of what you do each moment of the day.

Next, start every day with your top three priorities written down. Then, check your activities throughout the day to see which ones help achieve those three priorities. If you are doing things that aren’t a priority, ask yourself why. Awareness is a critical component to managing time more effectively.

Learn to love saying no, and learn to delegate. No one is good at everything, so focus on those things you are good at (and that you like to do) and see if you can delegate some of the other things.

Last idea – be sure to break down your to-do list into “bite sized,” manageable steps. The smaller the step, the easier it is to take.

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995; in 2008 she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers. She is currently an adjunct professor at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including the Wall Street Journal,, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

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