Last week, Schwab Advisor Services released its RIA Compensation Report. The report reflects responses from the annual RIA Benchmarking Study, the largest study of its kind, and offers a comprehensive look at compensation practices in the independent financial advice industry, with a total of 984 firms participating in the compensation portion of the study.
The base salaries presented in the report represent a 40-hour work week. In instances in which respondents worked less than 40 hours per week, the base salary was grossed to reflect that of a 40-hour work week.
Client Account Management, Sales, and Marketing
For client account management, sales, and marketing roles, base salaries ranged from $57,000 - $146,000 at the median, while total cash compensation ranged from $62,000 - $203,000 at the median. Total cash compensation, including owner profit distributions, ranged from $62,000 - $231,000 at the median.
More Client Service Associates (76%) received performance-based incentive pay compared with other roles.
27 percent of Senior Client Account Managers / Relationship Managers had compensation tied to revenue and 46% have some degree of firm ownership ‒ more than any other role.
Investments
For investment roles, base salaries ranged from $59,000 - $130,000 at the median. Total cash compensation, meanwhile, ranged from $65,000 - $161,000 at the median. While, total cash compensation, including owner profit distributions, ranged from $65,000 - $173,000.
The Schwab report also unveiled that over 60% of all investments roles receive performance-based pay. 85% of Portfolio Administrators collect performance-based incentive pay, followed by 83% of Paraplanners, 81% of Traders, 77% of Research Analysts, 68% of Financial Planners, and 61% of Investment/Portfolio Managers.
33 percent of Investment/Portfolio managers and 14 percent of Financial Planners have some degree of firm ownership. Almost a quarter (24%) of Financial Planners have 50% or more ownership in their firms, while 17% of Investment/Portfolio Managers have 50% or more ownership.
Operations and Administration
For operations and administration roles, base salaries ranged from $43,000 - $98,000 at the median. Total cash compensation, both with and without owner profit distributions, ranged from $46,000 - $110,000 at the median.
More than eight in ten (82%) Technology Professionals receive performance-based incentive pay, followed by Human Resource Professionals (80%) and Operations Directors/Managers, Operations Associates, and Receptionists (73%).
Operations and administrations staff, meanwhile are less likely to receive firm equity, 13 percent of Operations Directors/Managers hold some firm ownership.
Other notes
The Scwab report also showed that 2018 compensation costs for firms with over $250 million in AUM are 71 percent of revenue at the medium.
Also, it seems like it is a good time to be in the RIA business as 76 percent of firms are planning on hiring staff in the next 12 months. And to add to that, 42 percent of firms recruited employees from other registered investment advisors (RIAs) to fill open positions.
