How the Best OSJs Retain and Compensate Advisors

Consider that many advisors initially join a branch office when they transition to becoming independent. Initially, they may be happy without OSJ-provided office space or other support because their payout will still be more than it was at their wire house. In our experience, however, advisors in this situation typically leave once they’ve learned the ropes of independence. They don’t see the value in staying when they can replicate a similar situation on their own with the addition of license. Yet this is typically not the case for those who receive services of tangible value from their OSJ.

So how do you compensate advisors in your branch? In our experience, the average OSJ charges 5% to 8% for supervision only, without office space or any additional services. While compensation for a supervision-only situation may be simple to pinpoint, determining what to charge for those extra, value-added services is trickier because of the broad variance of costs across different markets.

For example, office space in New York City will likely cost more than equivalent space in a small rural town in the Midwest, as will salaries for support staff. This means any formula created to calculate the percentage of payout for services offered would be skewed.

The bottom line, however, is that in order to retain advisors in your branch and justify their compensation, your value proposition must qualitatively outweigh what you charge. Successful and growing OSJs offer value their advisors feel is justified and worth what they give up in commission, and therefore serve as compelling reasons to stay with that branch for the long term.