Sales Commission in Investment Industry – Key Points The roles and responsibilities of investment management industry professionals are hugely diverse. They devote their time to managing clients’ investment accounts, and their clientele include retirement and benefit funds, affluent persons, and financial institutions. The investment management market has grown a tremendous amount in the past few decades, thus becoming more competitive than ever. The market is all about soliciting funds from their customers then investing it with an insight. They rely on their experience to achieve greater account performance. In order to make it happen, they build profitable customer relationships and regulate operating costs. In the process, they also leverage advanced technology and manage the risks associated with new markets, products, and services.
Sales Commission in the Investment Industry The industry offers a variety of investment programs to its clients – institutional or individual clients. They charge a fee on their assets under the company’s management and generate a profit. However, the distribution of sales commissions among the sales reps remains controversial. Since the industry is highly regulated, calculation of sales commissions in the investment industry depends on legal and
accounting matters.
Key takeaways: * Sales reps usually get commissions based on the management fees paid by their clients. It could be a percentage of management fees. Generally, sales reps get commissions for multiple years whereas the rates keep declining year after year. * Sales reps get commissions to manage their existing clients and loop in new prospects to make additional dollars for their firm. They are incented on bringing additional dollars. * Each client or flow of dollars (tranche) has to be managed separately to calculate commissions. The process could be complicated as internal financial systems do not keep track of each flow separately. * Monthly or quarterly calculations of commissions are typical. * Additionally, different professionals get different commissions based on their position in the firm. Conclusively, sales commissions in the investment industry requires cumbersome calculation if a reliable tool or software is not available. Fortunately, software solutions like QCommission make the process entirely convenient. Source: - https://goo.gl/wab5rN