Peter Mallouk, president and chief executive of Creative Planning, has thrown down the gauntlet to the financial planning industry by pledging no layoffs or pay cuts resulting from any economic fallout from the coronavirus pandemic.
Mallouk, who made the commitment shortly after instituting a contingency plan a month ago that ordered all 700 employees to start working from home, doesn’t expect every advisory firm to follow his lead.
But he believes an industry largely sheltered from the worst of the economic downturn through a predictable stream of fees based on assets under management, should at least make an effort.
“We sent everybody home in mid-March and at that time I committed to the firm that we were not going to terminate or change anyone’s compensation regardless of how long this last,” he said. “I’m never going to have anyone work for me and worry about their job based on what’s happening in the economy.”
Mallouk added that even though he hasn’t heard of any other advisory firms making similar open-ended promises, “I think every major RIA should at least commit to protecting employees’ job and pay for six months or a year.”
Mallouk, who acquired Kansas City-based Creative Planning in 2004, made his commitment for the $45 billion firm public in response to suggestions on social media that advisers might have to start cutting fees in this difficult environment.
“We’ve always had a plan in place to protect our employees because we knew there could be some event someday,” Mallouk said. “This puts the employees in a better position to take care of the clients because they’re not lying in bed at night thinking about their own job.”