Owners of financial advisory firms average more than a half-million in annual income, new research shows.
This finding is unveiled in the “2015 Adviser Compensation & Staffing Study” conducted by InvestmentNews Research and The Ensemble Practice. The report examines compensation data from 363 advisory firms that supplied financial information for their organizations, as well as compensation, staffing, strategy, and management data on their practices.
The report pegs the average, pre-tax annual income for a “typical owner” of a financial advisory firm at $527,000. This compares with $465,000 in in 2013, a 13.3 percent rise.
The report attributes the double-digit rise in owner compensation mainly to a “leverage effect:” empowering lead advisors who earn a median of $143,000 and oversee an average of $478,000 in “revenue responsibility” to tap the owners’ experience and skills.
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Advisors’ compensation is rising in tandem with revenues generated by their firms, which have doubled in the last five years. In 2014, advisory firms revenues grew by an average of 13.5 percent (a dip from the 15.5 percent rise posted in 2013). Enjoying the most significant growth rates are “super ensemble firms” that garner more than $10 million in revenue.