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Executive salaries at credit counseling firms put management in top one percent of U.S. earners

Andrew Pizor

Andrew Pizor

While many consumers across America continue to struggle financially, executives at the largest non-profit credit counseling firms earn salaries that position them among the top one percent of earners in the U.S.

Many industry participants maintain that the organizations’ complexities and sheer size justify the salaries, which are analyzed by consultants and approved by boards of directors, but some critics say that the large paycheck is the face of a profit-oriented mentality that conflicts with the organizations’ missions of public service, Fox Business reports.

“You want [agencies] to be run by people who are interested in helping people,” Andrew Pizor, the staff attorney at the National Consumer Law Center, said, according to Fox Business. “If they want to get rich, they should go to Wall Street.”

Debt management fees, the voluntary counseling fees paid by consumers seeking financial advice that can range up to $50 every month, are the largest source of income for some organizations. Agencies also receive “fair share” and grant payments from credit card issuers.

Recent data from CreditCards.com revealed that salaries for the top executives at the 10 largest consumer credit counseling agencies range between $236,000 to almost $890,000, while the median salary is approximately $353,000. The top one percent income threshold for U.S. earners was approximately $344,000 in 2009, Fox Business reports.

The industry has seen a trend of consolidation, and fewer than 300 non-profit counseling agencies remain, a significant decrease from 850 firms over the past five years. As the organizations have gotten larger, executive pay has also increased. Many organizations also offer pre-bankruptcy and housing counseling services in addition to debt management advice.

“The business model is difficult,” David Jones, the president of the Association of Independent Consumer Credit Counseling Agencies, said, according to Fox Business. “It requires all the skill of a for-profit company, with the exception of managing equity. The CEO of a credit counseling agency has to be pretty sharp.”

While credit counseling executives see salaries ranging into the hundreds of thousands of dollars, a 2011 report from the U.S. Department of Labor revealed that the trained agency counselors receive an annual salary of $38,430.

Ivan Hand, the CEO of Texas-based Money Management International, the largest credit counseling agency in the country, received $883,839 in compensation in 2011, including $232,350 in retirement funds and $17,976 of non-taxable benefits. Hand’s position requires him to manage the organization, which has annual revenue of approximately $100 million per year and generates several times the amount in debt repayments to creditors, Fox Business reports.

Joanne Kerstetter, a spokesman for MMI, said that the job involves more than just overseeing a large operation, adding that the agency requires leadership that can respond to economic downturns in helping consumers cope with financial troubles.

“We’ve had the bankruptcy crisis, the housing crisis, now student loans,” Kerstetter said, according to Fox Business. “You need a leader of vision to make sure people are served.”

The IRS does not limit executive pay at non-profit organizations but requires the boards that establish executive pay to be unaffiliated with management and to examine pay levels at comparable organizations.

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