Most financial advisors are required to meet quotas, particularly if they work for firms that pay base salaries or draws in addition to commissions on sales. Advisors who set up their own practices or represents firm as independent contractors are not tied to production quotas since they work for themselves. These advisors, however, must also achieve certain sales numbers to cover expenses, turn a profit and remain in business.

Employee Vs. Independent Contractor

An employee works for a firm, while an independent contractor works on behalf of a firm but independently. As an employee, you have required work hours and job duties. In exchange, your employer is legally required to pay you for the hours you work, regardless of whether you sell anything. Your employer also covers your overhead when you work directly for the company. An independent contractor, by contrast, is in business for himself. He can run his business how he wants, but he must cover his own expenses and manage his own time.

Quotas for Employees

When you work for a firm as an employee, labor laws require your employer to pay you for your time. You receive a salary or a draw. The difference between the two is the money you receive from a draw is paid back to the company with future commissions. However, if you have a draw balance when you leave the company or are terminated, you do not have to pay it back.

Strict quotas almost always accompany a guaranteed salary or draw. Your employer does not want to pay you to warm a seat if you are not making sales and earning the company money. Miss your quota once or twice, and your employer generally places you on a performance improvement plan. You sit down with your boss, try to figure out where things are going wrong, and construct a written plan to improve your sales. If you still cannot meet quota, termination is the unfortunate next step.

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