With benefits, size matters

Employee benefits are an important factor in an advisory firm's annual expenses and set the tone for its ability to attract and retain prime hires.

Employee benefits are an important factor in an advisory firm’s annual expenses and set the tone for its ability to attract and retain prime hires.

The 2011 InvestmentNews/Moss Adams Adviser Compensation and Staffing Study revealed that 92% of all firms offer benefits, although only 49% of the smallest firms — those with $100,000 to $250,000 in revenue — offer them. Medical coverage, paid time off and other offerings are the norm with firms that have more than $250,000 in revenue; at least 81% of such polled firms provide benefits.

This is the first year the InvestmentNews/Moss Adams survey has collected benefits data.

Financial practices spend an average of $4,500 per worker each year to cover health care benefits and an additional $3,200 per employee on average on retirement benefits.

Medical insurance is the most common benefit offered to employees at financial advisory practices; 83% of those polled indicated they provide it, and 82% provide that coverage to workers’ families. About half provide dental coverage to employees, while about a third provide vision coverage.

Only the largest firms are able to provide a package of benefits, including medical, dental and vision, as well as life and short-term and long-term disability insurance, according to the survey. Only 18% of the 616 responding firms provide that array of coverage, and nearly two-thirds of them make at least $2 million in annual revenue.

In the trenches, financial advisers have fought to balance their ability to provide attractive employee benefits while maintaining reasonable costs.

Fox Joss & Yankee LLC, which manages $307 million in assets, currently offers seven full-time workers a high-deductible health plan along with a health savings account — to which the firm contributes $3,000 for deductibles — along with a package of dental, disability, life insurance and vision coverage. All of the premiums thus far have been paid for by the firm, which makes it stand out among its peers.

Firms generally foot the bill for 81% of workers’ medical insurance premiums, 39% of their dental coverage and 64% of their vision -coverage, according to the InvestmentNews/Moss Adams survey.

“Part of the reason we made the plan so generous was because three of the employees were partners and two have young children,” said Jon P. Yankee, a partner at the firm. Fox Joss & Yankee, which started out in 2006 with five workers, brought on a benefits consultant to help the firm put together the most attractive benefits package, but the concept was drafted by the firm itself.

Retirement plans also are the norm among financial advisory practices. Most of those with at least $500,000 in revenue provide a defined-contribution plan. Sixty-three percent of those with $500,000 to $1 million in revenue provide these benefits, and about 91% of those with more than $5 million in revenue have a DC plan for their staff.

Profit-sharing plans are not as popular as DC plans, with about 40% of firms with more than $5 million in revenue using them, compared with 35% of practices in the $500,000 to $1 million category.

Moneta Group LLC, which has $10.9 billion under management, offers both a profit-sharing plan and a 401(k) to its approximately 200 employees.

The defined-contribution plan, which has about $17 million in assets, offers a range of five risk-based portfolios. The firm will also match 50% of an employee’s retirement plan contributions up to 6% and is now examining a proposal to raise that match to 7%.

“For many workers, the retirement side is really important, but they don’t think about it until they’re beyond 50,” said Gene Diederich, chief executive of Moneta Group. “Make sure your employees are doing as much as they can to sock away money for retirement.”

The firm’s 30 principals also can establish bonus programs for their own teams of workers, he said. These arrangements might allow an adviser with a banner year to award a bonus to his or her administrative staff member.

Finally, advisory firms are appreciative of workers’ need to wind down; 98% of them offer some kind of time off with pay.

Mr. Yankee’s firm provides workers with 15 paid-time-off days, plus 12 to 14 holidays and the opportunity to work from home if needed. “It makes for a good atmosphere if you have employees who are happy,” he said. “We have to be generous as business owners to attract and retain the best talent we can.”

dmercado@investmentnews .com