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Tech Convergence in Financial Services Industry: Your Questions Answered

The convergence of financial services and technology has caused firms to put the transformation of their workforce at the center of their strategy. Companies are focused on exploring new ways of working, redesigning their organizational structures, evaluating their entire employee value proposition to improve engagement, and making strategic investments in new skills and technology to support this transformation. In order to compete with tech firms and with the growing popularity of the Silicon Valley approach to attracting and retaining key employees, financial firms must acknowledge that the broader ecosystem of rewarding digital talent is changing and transform their value proposition with it.

Tackling Trusted Traditions: Examining Life Insurer Sales Incentive Design Practices

When considering sales incentive design practice among life insurers, the chorus from Fiddler on the Roof may come to mind—Tradition...Tradition...Tradition. While traditions can provide some consistency and comfort, at what point do we have to seriously reconsider and revamp incentive design practices? At what point do we have to ask, does it really make sense to keep doing it this way?

United States Regulatory Update

On May 24, President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) (the Act) into law. This Act provides numerous areas of relief under the Dodd-Frank Act for both banks and credit unions alike. It is important to note that this Act does not provide for any provisions specifically focused on compensatory relief from the Dodd-Frank Act. While a separate bill, i.e., Financial CHOICE Act 2.0, does provide relief for a number of compensation items under the Dodd-Frank Act, its legislative future is uncertain at this point. McLagan will continue to monitor both legislative and regulatory changes that impact compensation management.

The Spotlight: Todd Leone, Partner, Global Head of Executive Compensation and Regional and Community Banking

Todd Leone leads McLagan’s global executive compensation practice and the regional and community banking sector team. Todd specializes in advising banks and compensation committees on complex compensation issues in the context of changing regulatory environments. He works with clients to design compensation plans that consider taxation, regulatory compliance, and compensation agreement provisions.

Questioning the Salary Question Ban: What are the Pros and Cons?

Inquiring about previous salary in job interviews may cause anxiety for both job candidates and hiring managers. It’s a touchy subject given the countless variables that could potentially be linked to an individual’s compensation history. Most cases of gender pay inequity are, in fact, initiated upon compiling the offer package for a new employee. In an effort to combat the disparity in compensation experienced by so many qualified candidates, several jurisdictions have or are enacting laws that impose restrictions on hiring managers with respect to asking applicants for their previous salary history.

Should Your Credit Union Think About Long-Term Incentives?

In today’s fiercely competitive market, credit unions are increasingly competing with the broader financial services market for top talent. This results in the need for new compensation plan design for credit union executives and key leaders. We’re beginning to see a rise in prevalence of long-term incentive plans (LTIPs) driven by three main factors:

  • Market trend towards performance-based compensation
  • Risk best practices
  • Tax law changes

The 2018 McLagan Perspectives Report: An In-Depth Exploration of Current and Future Trends in Financial Services

We are in an age of major global transformation for financial services. As technology continues to shape a new industry landscape, firms are forced to rapidly adapt to trends in the current market, including longstanding talent and rewards strategies to stay competitive in the race for tech-enabled talent. This is a challenge that financial services firms must face head on, while at the same time contending with political and social unrest, economic fluctuation, and strong regulatory standards.

Are You Creating a High Performance Culture at Your Firm?

Think twice before scrapping performance management at your firm. Rather, ensure that it delivers on its promise. Employees are attracted to firms that recognize their contributions and managers need to be held accountable for managing performance for their teams.

Executive Compensation: Hidden Questions in Bank Peer Group Selection

Most banks use peer groups to evaluate their executive compensation programs. However, since every peer group process is unique, creating hard and fast rules is not usually the best approach for firms to take. We have seven questions for consideration that may change the way you think about your compensation peer group altogether.

The Spotlight: Rob Northway, Partner, Head of Global Consumer Banking

Rob Northway, a Partner at McLagan, is head of the global consumer banking practice. Rob specializes in the design of compensation programs, guiding clients through the job architecture and leveling process, and supporting clients in aligning their human capital strategies with business objectives.

Fiduciary Rule Update

The roller coaster ride that has been the controversial Fiduciary Rule recently took a couple more hairpin turns. First came the news that the U.S. Department of Labor (DOL) officially delayed full implementation of its version of the rule. The DOL was quoted in an article published on March 16th by Bloomberg Law as saying, “Pending further review, the Department will not be enforcing the 2016 Fiduciary Rule.” Then on April 18th, the U.S. Securities and Exchange Commission (SEC) announced its proposed version of the rule, which, to nobody’s surprise, is not as strict as the DOL version. Below we provide our point of view, as well as responses from some of our clients on what we might expect to see happen in the near-term.

A Case Study in Leveraging Compensation Market Data: Re-Defining Your HR Function

The HR function plays a critical role in the future of financial services firms. HR helps ensure that organizations can effectively and efficiently attract, retain, develop, deploy, motivate, and compensate the talent that will help them reach their goals. We’re guessing that the average reader of this article is an HR or compensation professional, so they will already know and appreciate the breadth of these responsibilities. In order to fully achieve this vital role at time when there is a dramatic increase in the quantity of data available, HR needs access to data and to hire or develop individuals who can turn that data into powerful analytics to help answer business questions and inform talent strategies.

Aviation Finance: Navigating Executive Pay Programs

Second only to the weather, travel woes are the friendliest form of small-talk. Unexpected delays, airport congestion, and shrinking seat size are universally relatable for air travelers. However, it may come as a surprise that many aircraft are leased and not owned by the operating airline. In fact, a small group of organizations purchase, maintain, and lease aircraft to airlines. These aviation finance firms provide an interesting case study of compensation programs, reflecting the realities and forces that shape a specialty finance sector. The following article discusses the unique demands placed on executive management teams in aviation finance, why it is challenging to recruit and retain these individuals, and considerations for setting an effective pay strategy.

Winning the Talent War in China

According to our recent China McLagan Talent Pulse Study, talent management tops the agenda for an overwhelming majority of the 58 participating firms, ahead of growth, innovation, and customer service. We’ve outlined some of the innovative strategies that firms can adopt to stay ahead and win the best talent in China.

The Spotlight: Ephraim Edelman, Partner, McLagan Reward Data Solutions

Ephraim Edelman leads the reward data business for McLagan, including strategic initiatives of product development, platform roadmap, machine learning, and governance, as well as new data and analytics client solutions.

Five Considerations When Choosing the Source of your Compensation Market Data

Independent compensation market data provides a source for examining pay levels and pay mix to evaluate the competitiveness of firm compensation packages. As the trend of prohibiting firms from asking candidates for their salary history continues to rise, using trusted third party data to ensure competitive pay programs is critically important.

Are You Hiring the Best Talent for Your Firm?

Times have changed for financial services. Firms are faced with disruptive technologies, digitization, new market entrants, a transforming workforce and fierce competition for talent. Finding the right talent off the bat is therefore more important than ever before. Measuring personality through the use of assessments can help pinpoint who will be the best fit for the job, your company culture, and the future success of your firm.

Australian Regulators “BEAR” Down on Accountability

The Banking Executive Accountability Regime (BEAR) is scheduled to go live in Australia on July 1, 2018. This marks the Australian government’s latest response to improving accountability in the financial services industry. The new regulation aims to raise the bar for risk management and corporate governance standards and outline consequences for both institutions and responsible individuals who breach the required standards of the regulation.

The Spotlight: Kate Cramer, Partner, BCM Performance

Kate Cramer is part of the BCM Performance practice. In her role, Kate delivers market share
and strategic advice to investment banking clients across the globe.

What Are the Future Talent Needs of Wealth Management Firms?

A recent McLagan Wealth Management study, Future Talent Needs (December 2017), indicated a number of significant shifts to the type of talent and desirable skills that firms will be hiring over the next five years. These new, in-demand skill sets will evolve to become the standard advisor profile, given today’s technological advancements, automation, and current changes to advisor role responsibilities.

The Call Center Customer Experience Evolution and Changing Talent Demands

Like many other aspects of the financial services industry, the call center as we know it is changing. Technology is disrupting historic practices and generating new, client-centric demands that require shifts in current focus areas and models. As a result, call centers now face a fresh set of challenges surrounding training and development, pay levels, job structure, incentive plan design, career progression, and more, all while competing with the appeal of non-financial services firms.

Banking Standards Board: Doing Well While Also Doing Good

In the wake of the 2008 financial crisis, the UK financial services industry shifted its focus to restoring trust and shaping a more resilient and consumer-oriented industry. Considered the worst economic disaster since the Great Depression, the crisis suggested that banks had failed to appropriately serve customers, as well as the public good. Although the UK banking sector holds great importance to the overall economy and society, regaining trust in the industry is an ongoing struggle that requires sustained improvements to leadership and culture.

The Spotlight: Martin McGuigan, Partner, Head of Middle East

Martin McGuigan partners with firms on their rewards strategies in the Gulf Corporation Council and other regional markets, such as Egypt, Lebanon, Jordan, and Pakistan.

What’s Trending in Property-Casualty Insurance?

The changes occurring within financial services are indisputable. Technology disruption is real and it’s happening all around us, influencing workforce strategies, capabilities, operations, expense management, as well as employee and customer expectations and behaviors. This is especially true in the property-casualty insurance industry, where the focus lies on people and achieving an optimal customer experience.

What You Need to Know About Brazil’s New Labor Laws

While companies continue to wait for answers on how the courts will rule on any grey areas surrounding Brazil’s new labor laws, it is important to understand their implications on local human resources departments. Most of all, the new labor laws provide companies with more flexibility for hiring and remunerating their employees.

A Backward Glance and Forward Look at Board of Director Compensation

Across the banking industry, director compensation remains subject to regulatory and shareholder scrutiny. While increases in director pay have continued in recent years, the mix of pay has also continued to shift.

Corporate Titles at Credit Unions

Corporate titles, such as EVP, SVP, VP, and AVP are widely used at both credit unions and banks. Historically, banks tend to make more extensive use of corporate titles across the employee population. As credit unions increasingly compete with banks for talent and business, their title structures and approach to title management may also need to change.

The Newly Revised U.S. Tax Code Will Influence Executive and Employee Pay, but How Much?

In addition to the changes to corporate and personal income tax levels, the new tax bill is likely to influence incentive compensation for executives and the broader employee population.

The Spotlight: Shelley Eisenhandler, Partner, Asset Management

Shelley Eisenhandler, a Partner in the Asset Management practice, manages McLagan’s alternative asset management business, including over 200 hedge funds, private equity firms, and real estate investment managers.

 

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