Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Practice Management > Compensation and Fees

In Today’s Tight Job Market, It Pays to Review Compensation

Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Here are the pros and cons of some salary and benefit structures that are common in the advisory business.

Even though the Great Resignation typically has had its greatest effect on lower wage earners in the restaurant and hospitality industries, financial planning firms are not immune. In turbulent times such as these, firms need to ensure they are closely monitoring the compensation structures to decide if an adjustment is necessary.

Below are the most common compensation models for new financial planning professionals. They assume the position is a W-2 employee in an RIA. It would be for a paraplanner or associate planner role that is responsible for financial planning support and not primarily doing business development.

Straight Salary

Pros: This is the most simple and straightforward to set and administer from the owner’s perspective. If you need help determining salary amounts, download the New Planner Recruiting 2021 Salary Report, which includes about 200 data points collected recently from job seekers on pay expectations.

Cons: Doesn’t incentivize team members to deliver results beyond basic job responsibilities, which is why it is the least common structure we see.

Salary Plus Commission

Pros: Most common in the hybrid RIA broker-dealer affiliation model. Provides a guaranteed minimum amount each month, combined with upside potential if certain products and/or services are sold and generate revenue in addition to the core support-oriented job duties.

Cons: Can create a conflict by incentivizing the promotion of products and/or services that aren’t necessarily a fit for the client situation, and/or “distract” the team member from the support work they’re supposed to be doing for their lead advisor as well. Can be difficult to administer due to the burden of keeping up with payout grids, schedules, rep codes, etc.

Commissions are usually 50%/50% of the total amount on any revenue generated from product sales for split cases where another planner may be involved, but can be as little as 10% depending on grid payout or amount of contribution to close the sale up to 70-80%.

Salary Plus Bonus

Pros: The most common structure in the RIA channel. Provides a stable monthly base wage, plus upside potential if efforts produce returns above basic job requirements. A typical bonus structure can be anywhere from 5%–25% of the base salary amount. Can be set as discretionary, or formulaic, by firm leadership.

Cons: Can easily become overcomplicated, and team members don’t see it as a benefit if the metrics are solely based on the firm’s performance that they have little to no control over (e.g., profit, revenue, AUM, new clients, etc.).

Many firms settle on a combination of firm factors, but also individual factors (e.g., plans completed, client development, client retention, exams passed/certifications gained, training completed.). Keep in mind that whatever you set as the metrics, especially, for the individual component, they need to be laid out very clearly.

Salary Plus Fee Split

Pros: Utilized frequently in the fee-only RIA and hybrid RIA structures. An incentive for team members to perform activities that generate additional revenue for the firm, and participate financially in the growth of the firm’s revenue base. Creates built-in incentives for ongoing client retention because fees will stop if the client leaves.

Also builds in team member retention as longer-tenured employees may find it more difficult to walk away from a built-in recurring income stream to join another firm if clients stay at the original firm. This can be paid for bringing in a client when it is not part of the primary role or servicing a client that someone else brought in.

Cons: Can create a significant revenue stream for team members that, once it builds up over time, can actually disincentivize them to continue to go beyond their basic job requirements. We have seen new client development/servicing splits pay up to 50% of first year’s fees (AUM, retainer, or hourly) with zero residual payments, all the way to no upfront fee but 50% fee split in perpetuity, and many others in between.


Caleb Brown is co-founder and CEO of New Planner Recruiting. His podcast is at


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.