4 Considerations When Tracking Client Referrals

True commission plans take on an entirely new level of data and compliance considerations as you tackle tracking incentives for your banking or financial organization. They often involve tracking data from third party vendors that may not always have the granular level of tracking client referrals needed to trace results back to a particular individual for certain specialty products. As you design your compensation plan, be sure to conduct data mapping activities and explore the state and federal laws pertaining to your organization before finalizing your compensation plan. Here are 4 key questions to consider as you craft your program:

1. Does your organization use a licensing tracking system to credit sales to your licensed employees? 

Because there are so many varying licenses that individuals can have in the investment/insurance world, and because there are both state and federal licensing considerations, you don’t want to pay incentives on products that your employees are not licensed to sell. It is important to validate your process to certify the data coming into your incentive tracking process has been filtered. This ensures incentives are not paid unless the participant is properly licensed. If a participant loses a license due to not completing required courses, or is suspended for any other reason, you want to filter that information before data hits your incentive process. Once a suspension is lifted, you will either need to restart the data flow as of the suspension lift date; or have the “held” data uploaded if they are now eligible for past sales.

There are workarounds that can take a great deal of monitoring. However, they can provide a solution if you need time to work out licensing and suspension data mapping. If you can store licensing values for participants with suspension rules and indicators, you can appropriately manage licensing requirements incentives while tracking client referrals. 

2. Does your organization leverage third party data vendors to purchase select investment/insurance products? 

When using third party data vendors, you may have the opportunity to feed data back to your databases. The data comes back with your participants’ registered identifier, which you can map through your licensing system and incentive process. However, for a few specialty products with low volume sales, your organization may get one lump sum fee representing multiple transactions. This will not provide individual client or participant data for you to map back for incentives. In these cases, you have one of three options to consider:

a) Work with the vendor to provide individual transactions. This can be expensive as it may require the vendor to create a custom feed for your organization.

b) Eliminate these few specialty products from the incentive plan. They may be rare sales to accommodate client needs and a small part of overall sales volume. This may not be worth maintaining.

c) Establish a manual process to credit the sales at the time of the transaction. A good incentive compensation management solution will allow manual entry once the sale is verified by a manager of the organization that may have fulfilled the sale.

3. Are you set up to manage negative transactions? 

As you map your data, you may determine that negative transactions can come through when a client transaction is reversed. This can occur for different reasons. One, it could have been set up incorrectly; or two, the client changed their mind and the transaction is canceled after the booking. By ensuring your incentive processing is set up to handle negative fee transactions, and, in the case of a reversal coming through in a subsequent month (not the month the credit was provided) your incentive plan rules must be clearly spelled out for participants to understand the impacts of cross month credit.

4. What are the retention requirements for investment commissions/incentives?

Often the regulations around commission retention for licensed products are longer than your traditional banking product sales. These requirements can also change as regulations are modified. Make sure your incentive process or system can store the historical records of who was credited, and how much was credited for each transaction for the appropriate time. If you are a large organization that needs to keep historical records as lean as possible within your incentive database for processing efficiencies, be sure you spin-off data to a compliance database to ensure you meet the regulatory requirements. 

Tracking client referrals within your organization can be difficult. However, you can seamlessly streamline these processes by adopting a robust automated incentive compensation management solution. To learn more about how client referral tracking can be optimized within an ICM tool, visit https://www.themotivator.com/.