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Ryan Grau: Hey, good afternoon. Thank everybody, everybody, for taking time out of your day to join us.

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Ryan Grau: We still have people that are signing in and getting join… or joining the session here, so we’ll give everybody a second.

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Ryan Grau: Before we dive in.

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Ryan Grau: So, our primary topic today is going to be compensation trends. So, for those of you that are tuning in, this is going to be the first of an annual series of presentations that we’re going to be presenting. So, in case you missed it.

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Ryan Grau: Last month, we gave our update on mergers and acquisitions and activities for… from 2025.

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Ryan Grau: What we’re going to be discussing on today’s presentation is trends in compensation that we observed over 2025.

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Ryan Grau: So…

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Ryan Grau: Before we get started, we’re gonna launch some polling questions here for you, and while you’re doing that.

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Ryan Grau: I do want to let you know that this presentation will be recorded, so if you’re not able to sit through the entire presentation, we will send you a link, and we ask that if you find the content that we share with you today helpful, that share the link with your colleagues.

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Ryan Grau: Alright, so I’ll give you guys just a few more seconds here to work through those polling questions.

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Ryan Grau: And following our presentation today, we do have a couple more presentations that are coming up in both March and April.

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Ryan Grau: David Grau, Parker Fino, and Kristen Grau are going to be talking about, how to grow your firm without limitations,

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Ryan Grau: in March, and then in April, Nicole Frye will be doing a presentation on mergers and teaming.

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Ryan Grau: All right, we should be wrapped up with the poll questions. So, for those of you that are not familiar with SRG and are just tuning in.

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Ryan Grau: So, SRG has been guiding advisors in the independent space, so both registered reps and RIAs, of various sizes for over 14 years now.

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Ryan Grau: Our team brings together professionals who specialize in everything from valuation to value building.

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Ryan Grau: Exit planning and exit strategies, and what we’ll be talking about today, compensation strategies, employment resources, and compensation design.

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Ryan Grau: So, we’ve completed several thousand valuations, as well as mergers and acquisitions, deals.

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Ryan Grau: We’ve done hundreds of succession plans, so internal transition of ownership to key employees.

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Ryan Grau: And we are here today to offer the depth and experience that we have collected over the years to help you make informed decisions around compensation.

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Ryan Grau: So, beyond just compensation data.

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Ryan Grau: SRG offers a variety of services, so our bread and butter is valuations, that’s what me and my team focus on.

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Ryan Grau: But beyond that, we help advisors with structuring their business from entity setup, redesign, and reorganization. We assist in creating employment contracts, the succession plans, equity sharing models, whether that be phantom or synthetic equity or other forms.

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Ryan Grau: We also address death and disability planning, and then, last and not least, is we offer full deal support for advisors that are in transition. So, we work with buyers and sellers to put together their purchase agreements.

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Ryan Grau: We work with buyers to network and find potential sellers, and vice versa. We work with sellers to help them find potential buyers.

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Ryan Grau: We also work on mergers of various scale

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Ryan Grau: So, our job is to help you understand value, what those KPIs are, what levers you can pull to continue driving value, and then how to make sure that you can put your value to work.

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Ryan Grau: And make sure that it’s protected for… Creating transferable and enduring value.

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Ryan Grau: So…

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Ryan Grau: Today’s presenters is going to be Julia Sexton and myself. Julia’s going to be doing a lot of the heavy lifting, so she leads our team on what we call our HR solutions, which includes compensation design.

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Ryan Grau: Compensation strategies, equity sharing, as well as employment resources.

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Ryan Grau: Julia has been consulting financial advisors now going on 8 years.

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Ryan Grau: Her role originally started in valuation work, and then shifted into helping advisors that were merging silos together. So, her work naturally evolved from valuation to providing ownership, equity recommendations, and merging firms together.

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Ryan Grau: As well as deal support, and then from there, one of the big issues that most advisors run into when bringing their practices together is compensation.

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Ryan Grau: So, and specifically in those type of deals, it’s owner compensation, and how do we set level and fair compensation, which tends to be one of the largest topics and hurdles to get over in those forms.

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Ryan Grau: So… She is bringing quite a bit of experience to the table, also supported by data and observation.

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Ryan Grau: I’m gonna be here just moderating, answering questions in the background, and I’ll bring in a couple points, but with that, before I hand the mic over to Julia, we’re gonna drop just a few more polling questions for you, if you don’t mind, that are specific to the topics that we’re gonna be covering today.

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Julia Sexton: All right, and I’ll let everyone take a minute to answer those couple of questions as I dive into a little bit more about our data, specifically, of course, that we’re going to be presenting and talking about today.

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Julia Sexton: We have, over the years, analyzed hundreds of firms, thousands of employee compensation data points, all to help us identify patterns, trends, and areas of misalignment within the context of compensation and staffing.

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Julia Sexton: So in today’s presentation, being, as Ryan mentioned, our first, what will become, annual compensation and staffing report, is all built upon the data that is collected through our evaluation analyses.

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Julia Sexton: What makes our compensation design and support work different is that it is grounded in this real data. Not theory, not surveys alone, but actual valuation data and real firm financials.

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Julia Sexton: It’s reviewed, verified, and prepared in a meaningful way so that it is useful and applicable to your business planning. And that’s what we want to share with you today.

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Julia Sexton: What we want to share with you today, or at least starting with, is that we have seen the compensation continues to change and evolve, which I’m sure we all know, but we’re seeing shifts in how firms are paying advisors, how they structure operations roles.

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Julia Sexton: How executive teams are incentivized, and how equity and long-term incentives are being used in addition to what we all know as more traditional compensation tools.

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Julia Sexton: So, if you are someone listening today, live or later in replay, who hasn’t intentionally reviewed your compensation strategy in the last few years or longer, there’s a good chance that that plan is drifting. So, we’re glad you’re here, and hoping that we can give you some really valuable information

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Julia Sexton: Today, regarding compensation tools.

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Julia Sexton: the importance of prioritizing an intentional compensation strategy, or building one, and of course, the importance of using the tools that we’re going to talk about today effectively, because those terms are not synonymous. Using them does not mean that they’re being used effectively, and effective use

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Julia Sexton: Really does require expert-led guidance and intentionality with long-term goals in mind.

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Julia Sexton: So, most of us should be wrapped up with those poll questions. What we’re gonna talk about today, over the next

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Julia Sexton: We’re hopefully 45 minutes or so, leaving a couple minutes at least for some questions, so feel free to drop those in the chat box.

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Julia Sexton: But what we’re gonna break down is, first and foremost, what compensation really means, and what it includes.

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Julia Sexton: how advisory firms are structuring pay across various roles that are applicable to most listeners today, I suspect.

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Julia Sexton: What our data tells us about staffing trends.

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Julia Sexton: Whether geography truly matters, or has an impact on compensation benchmarking.

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Julia Sexton: And arguably, most importantly, how to better leverage the tools that you have, and what tools that you need to start implementing heading into 2026.

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Julia Sexton: I also really want to highlight that today isn’t just about benchmarking numbers. It’s about aligning compensation with role clarity.

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Julia Sexton: behaviors.

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Julia Sexton: Growth objectives and long-term enterprise value, because when compensation is designed intentionally, it becomes one of the most powerful strategic levers that you have in your firm, and is so critical

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Julia Sexton: To so many transaction and business growth initiatives, succession planning viability, and just the overall cultural and financial health of your business.

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Julia Sexton: So…

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Ryan Grau: And real quick, just to add one bit to that, Julia, it’s one of the quickest ways to derail value.

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Julia Sexton: Absolutely.

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Julia Sexton: We’ll get into a little more why, also.

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Julia Sexton: So, we’ll start with the foundation, ultimately what we mean when we say compensation.

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Julia Sexton: We are not just talking about base salary and that discretionary Christmas bonus that happens some years and doesn’t in others.

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Julia Sexton: When we’re talking about compensation, we’re talking about the cash components, the benefits, and the long-term growth opportunities. When an employee considers their overall perceived appreciation and value within the company, they’re probably thinking about cash compensation.

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Julia Sexton: But when they’re thinking about their overall workplace happiness.

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Julia Sexton: They’re obviously considering the benefits packages, or what’s included in their package. So, retirement contributions, health insurance, PTO, also important things like work-life balance, opportunity for growth, the overall management and support that they get.

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Julia Sexton: They’re also gonna start thinking about or asking themselves, is this my long-term employer? Do I want to be with the company for a long time?

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Julia Sexton: And that’s when they’re gonna start looking at those opportunities for growth.

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Julia Sexton: Long-term value or profit participation opportunities, or some level of executive-level opportunity that will incentivize them to continue to work hard, knowing that they’re working towards additional benefits and towards additional recognition.

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Julia Sexton: That’s why compensation does mean all of these things. It means salary, bonus, employer-provided retirement contributions, health insurance.

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Julia Sexton: PTO, phantom equity, maybe other versions of long-term incentive plans, and then eventually equity ownership, and what comes of that is the return on ownership.

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Julia Sexton: The issue is that many business owners that we ask today, or hear their interpretation of what compensation means, they’re still thinking about compensation in those first two buckets, salary and bonus.

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Julia Sexton: The issue is, or the focus is, that today’s… in today’s environment, compensation is more than that. It’s an architecture. It’s a system of tools where each tool influences behavior differently. Like, salary drives stability.

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Julia Sexton: Bonus drives performance. Profit sharing drives collaboration. Inequity sharing, or equity in general, drives that long-term thinking and retention.

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Julia Sexton: So if you’re only using one or two of these tools, or you’re using them in isolation, without actually taking a step back and observing the feedback from your team that is there, whether you’re choosing to see it or not.

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Julia Sexton: You’re potentially limiting your strategic leverage, and my interpretation of that is you’re at a point where you’re just checking boxes, maybe without that intentionality.

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Julia Sexton: This is where alignment becomes critical in your compensation model, and your compensation model has to reflect your business model.

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Julia Sexton: So, maybe start by asking yourself now, or maybe at some time later when you have a little more time to think through this, in more detail, but are you structured as a production-driven firm? Are you a collaborative ensemble?

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Julia Sexton: Do you want to be, or are you acting as a multi-partner enterprise? Are you a growth-oriented platform?

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Julia Sexton: This is important because…

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Julia Sexton: If your compensation structure contradicts your organizational design, maybe not now, not yet, but tensions will build.

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Julia Sexton: For example, if you say that you’re…

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Julia Sexton: focus is on value collaboration, but you compensate only on individual production, you’re creating silos.

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Julia Sexton: If you say that you’re focused on growing enterprise value, but you’re only rewarding short-term revenue, you’re gonna stall your growth.

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Julia Sexton: This is really important, and the focus here is because compensation drives behavior. And behavior drives culture, and culture is what drives that value.

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Julia Sexton: So it’s important to start with honesty with yourself and what your business model is to help determine what your goals are.

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Julia Sexton: For example, production-driven, siloed business models are becoming a thing of the past.

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Julia Sexton: It doesn’t mean that the structure is wrong, but as firms shift their goals to be more team-based, collaborative, and ensemble-driven, yet they’re still paying their advisors production payouts.

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Julia Sexton: There’s a clear misalignment in their goals.

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Julia Sexton: Or their perceived model, I should say, and the actual model that they’re actually leveraging in practice.

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Julia Sexton: So if this is you, you may not feel it now, but if you’re forgetting, or maybe choosing not to readdress the compensation for your team as you make this shift in practice.

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Julia Sexton: You will face a massive hurdle at some point, and our experience is…

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Julia Sexton: In the compensation work that we do, the longer you wait, and the longer you pay your advisor’s payouts on an ensemble-based mindset and culture, the harder it is to change that pay structure later.

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Julia Sexton: Before we jump into the data, which I promise we’re gonna get there, just want… we have to talk about roles, what we mean when we talk about specific roles. One of the most common issues that we see in advisory firms is role ambiguity.

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Julia Sexton: Role definition, classification can vary within the industry, and can become very size-dependent, meaning for smaller companies, most of the time, employees more commonly wear many hats, versus larger firms are

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Julia Sexton: More able, or truly able, to specialize in their roles.

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Julia Sexton: And this will have a direct impact on what your role definitions are and what the compensation data represents. In some instances, salaries

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Julia Sexton: for certain roles, aren’t as different as some might think that they would be for small versus mid to large-sized businesses. And this is because operations managers, for example, is a common one. In a smaller firm.

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Julia Sexton: He’s doing a lot more in terms of, like, the range of their responsibilities and tasks than a typical operations manager, and the definition of that role would be in a mid- to large-sized firm.

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Julia Sexton: Therefore, as expected, their salary is reflective of the job and the responsibilities that they have, the job they’re doing, versus the actual title that they wear.

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Julia Sexton: So, let’s just take a look at, first, before again we get into the data, how we categorize roles across the various categories that you’re seeing on screen.

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Julia Sexton: So for advisor roles, commonly we have support, service, and lead advisors.

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Julia Sexton: on the operations and administrative side, we’re primarily talking about administrative assistants, operations managers, client service administrators, senior client service administrators, and then on the executive side, primarily looking at CEOs.

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Julia Sexton: COOs, CIOs, and practicing partners.

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Julia Sexton: Again, these are just a handful of common roles across the typical team to support our conversation today. But whether or not you use our role categories, our definitions, or something else, it’s important that you have some level of role categorization and clear definition.

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Julia Sexton: For your team, so that you can avoid compensation becoming reactive instead of strategic.

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Julia Sexton: So if being honest and clear about your business model and goals and objectives is step one, clarity around role scope and expectations is your second step in your overall compensation design.

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Julia Sexton: So one of the biggest shifts we’re seeing, and definitely helping influence in the industry, is…

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Julia Sexton: Actually formalizing those roles, and specifically through formalized career pathing.

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Julia Sexton: This is a critical step in defining the roles on your team.

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Julia Sexton: And historically.

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Julia Sexton: The process has been, bodies were needed, so people were hired, people then grew into the roles, and then titles and career progression were very inconsistent across teams.

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Julia Sexton: Now, with defined career tracks emerging, it’s becoming one of the most important retention tools.

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Julia Sexton: For example, firms that can clearly define what it means to be a support advisor, and what it takes to progress and grow into a service advisor, to then progress and grow through their career into a lead advisor.

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Julia Sexton: or on the administrative and operations side, starting as an administrative assistant, growing into a team or department lead or manager, to then grow into an executive-level COO.

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Julia Sexton: These teams… Practicing this are experiencing lower turnover, more internal promotions, and a higher level of overall engagement.

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Julia Sexton: There’s a lot on the slide here, I know. It’s all valuable information. As Ryan mentioned, we’re going to share a copy of our slide deck, as a follow-up to today’s presentation, so you’ll get a copy. If you want to take a closer look at what is a real example of a career path for an advisor role.

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Julia Sexton: I highly encourage you to.

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Julia Sexton: But this is part of the process that we walk clients through as a basis for this conversation around career pathing.

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Julia Sexton: The key takeaway for today’s conversation, from career pathing as a strategic element, though, is that

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Julia Sexton: When employees understand what’s required to move forward, compensation growth becomes predictable and motivating, not arbitrary or political.

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Julia Sexton: This one actually hits close to home. I have a peer who works for a well-established, pretty sizable business that would otherwise believe they have a well-established and a transparent career path. And at the surface.

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Julia Sexton: They may, but they also have an entire group of employees on the team who just finished their annual review process, were presented with a list of

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Julia Sexton: Caveats and what they felt were hidden requirements to get that next promotion, or to get that good review that they felt deserving of.

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Julia Sexton: Some may… some of this may certainly be a reflection of management or communication, but the point is, even if you have a process or a general mock-up of a career path.

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Julia Sexton: This is a process that you want your team to be intimately aware of, to keep them motivated, and to keep them aligned with growth and success for the business.

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Julia Sexton: Alright, so we can get into the data. What are the compensation trends, is the question. We’ll start with the advisor roles, and what trends are presented from the data.

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Julia Sexton: We’ll start with an obvious observation, but nonetheless important to address, and that is that the average national compensation for advisors increases as they progress through their career path.

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Julia Sexton: So, think back to the career path that we just looked at for the advisors, and that natural growth from support to service advisor to lead advisor.

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Julia Sexton: The compensation that you’re seeing on screen here, and that you’ll see for the other various roles, is presented in a range of low, medium, and high, which will help you determine what a reasonable range would be for a similar role on your own team.

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Julia Sexton: We’ll start as the data presents and is in the natural career progression here, so with the support advisor.

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Julia Sexton: Maybe you have a support advisor starting out on your team, or you’re going to be hiring one soon.

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Julia Sexton: Their role is to support the service and the lead advisors. Typically, they’d be hired straight out of college, or just in general with limited industry experience. Therefore, at that point, they would be on the low end of the range.

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Julia Sexton: Maybe a year or two into the role, you target that median figure. Another year or two later, maybe they are starting to take on a more meaningful role in client meetings, writing.

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Julia Sexton: Backseat, maybe a little bit of shotgun to the service and the lead advisors.

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Julia Sexton: Then, okay, you’re targeting compensation on the high end of that range. As they’re preparing and showing what it takes, taking the necessary steps to prepare for that next stage in their natural career path, which would be becoming a servicing advisor.

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Julia Sexton: The clearest distinction that I can then provide between a support versus a service versus a lead advisor is that support advisors are doing just that, as I mentioned. They’re supporting those that are servicing accounts or leading them.

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Julia Sexton: Whereas a servicing advisor is now managing client relationships, generally with some oversight still, at least on some of the larger accounts, and for the most part.

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Julia Sexton: They’re being handed accounts directly to them from higher-level advisors, some more commonly the lead advisors, who need to create more capacity.

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Julia Sexton: To be able to manage higher net worth clients, so they begin delegating.

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Julia Sexton: So a lead advisor then, naturally, is the primary manager of the client accounts without oversight. Rather, they’re doing the oversight, they’re managing and training lower-level advisors, and actually bringing in more clients to the firm from their own sources.

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Julia Sexton: There are a couple of asterisks, important asterisks that I want to mention here as well as we continue to go through the data.

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Julia Sexton: And first is that this is distilled data to provide national averages, meaning there’s a ton of data that we’ve distilled down to averages for the purpose of this presentation.

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Julia Sexton: There’s a lot more to take into account when we’re actually looking at designing compensation on a per-roll basis, so that just means please don’t anchor to the values that you’re seeing on screen here today.

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Julia Sexton: Also, regarding the application and the use of benchmarking data, I have this conversation in every design project that I work on.

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Julia Sexton: And it’s applicable, excuse me, to more than just this industry, but it’s that benchmarking data doesn’t have to be followed to a T. Data is meant to be informative, meaning if you’re currently paying outside of these compensation ranges, use that information to help you determine your next steps.

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Julia Sexton: If you’re below the averages, figure out if that’s a reflection of talent options, maybe some slow career growth, maybe just a lack of knowledge on your end. So, target some incremental salaries.

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Julia Sexton: To increase to get them back into a competitive range to ensure that retention.

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Julia Sexton: Alternatively, if you’re on the high end, or above the high end of the range, one, that doesn’t mean that you’re alone, or you’re the only one here paying more than this range. These, again, this is just still data, these are data quartiles, so we can provide you with common ranges.

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Julia Sexton: And two, again, let this inform your future decisions. Or at the very least, isn’t this good to know? That information is information you can share with your team when you review compensation annually, and they ask you for more.

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Julia Sexton: You might decide still to give them more, but it’s helpful to be able to point to industry benchmarking data that shows them they are being highly compensated within their role compared to others.

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Julia Sexton: It’ll definitely help reset expectations in that instance, and hopefully employee mentality.

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Julia Sexton: And again, it doesn’t mean that you’re gonna pay them less or slow their salary growth.

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Julia Sexton: But if they don’t know what a normal range is, or if they’re getting non-industry or generalized benchmarking data on their own, it’s really crucial that you have the industry-led data to support your delivery.

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Julia Sexton: That’s exactly what we deliver as a level of service to the industry through our annual compensation and staffing research report, and that is our talent strategy report.

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Julia Sexton: I’ll talk a little bit more about this later on in the presentation as an important strategy and step to take into next year and beyond, but remember that.

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Julia Sexton: Also on the slide here, and will be highlighted in the additional compensation we’ll look at, is the breakdown of salary versus bonus as the cash compensation that we’re highlighting here.

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Julia Sexton: And bonuses tend to follow a similar trend as well.

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Julia Sexton: We’ll take support advisor as a role as our first example. Since the overwhelming majority of a support advisor’s role is spent on support tasks, they should be paid a salary based on their responsibilities and their duties. Therefore, bonus for a support advisor’s

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Julia Sexton: Generally, an overwhelming percentage of their total compensation, and would be based on their overall representation of your company’s brand standards, or their performance goals that you’ve set for them.

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Julia Sexton: And some level of overall reward for overall success of the team.

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Julia Sexton: Whereas a servicing advisor is actually managing accounts, relationships, and therefore have a more direct role on growth and client or AUM retention for the company. Therefore, we start to introduce bonuses like a measure of net flows.

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Julia Sexton: To incentivize really good client service, and then actually reward them for their individual performance and successful contributions.

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Julia Sexton: Lead advisors, of course, have more tenure and experience, as well as potentially the opportunity to specialize more, or certainly an opportunity to work with overall higher net worth clients.

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Julia Sexton: The servicing side of the role is similar to that of a servicing advisor, of course. But there’s more business development activities, or as we like to call that, hunter activities, hunter versus farmer. Farmer activities, of course, being more of the servicing side.

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Julia Sexton: So lead advisors start to shift more into that hunter role, and have a more direct and impactful

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Julia Sexton: Influence on the overall growth and success of the business.

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Julia Sexton: Therefore, we still have one-time bonuses to reward lead advisors for their net flows, or the new AUM contributions, so again, that business development side, because we want to still keep them motivated to contribute this, and contribute to the growth year over year.

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Julia Sexton: However, of course, their bonuses as a percentage of their overall compensation do become more meaningful as you progress through the roles.

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Julia Sexton: Operations roles have experienced some meaningful shifts as well.

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Julia Sexton: And this is because operations are no longer just support. It’s infrastructure. And what we’re seeing is higher base compensation, or increases to base compensation with the rest of the industry.

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Julia Sexton: Profitability-based bonuses introduced to better define activities that actually incentivize behaviors that you would want to see come from this type of role, like creating operational efficiencies.

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Julia Sexton: And then an actual reward for those activities and accomplishments.

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Julia Sexton: As well as we’ve seen expansions into executive and director-level roles, again, for operations specifically.

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Julia Sexton: And as a response.

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Julia Sexton: We are consistently seeing firms that do invest strategically in operations and staff to support operations.

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Julia Sexton: Actually improve their margins and scalability, while those that are rather undercompensated or just underdeveloped on the operations side of the team end up constraining their growth.

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Julia Sexton: What we are seeing on the executive compensation side… Is that it’s… Becoming more structured?

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Julia Sexton: I’m only sort of joking.

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Julia Sexton: Because compensation for executive roles has almost always been a hard topic to tackle in this industry particularly, because as I mentioned before, that wearer of many hats, or the overlap in role.

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Julia Sexton: definition, most executives are wearers of many hats. We get all the time, or we hear all the time, I guess I’m CEO, but I’m also a lead advisor, but I’m also sort of a CIO, and also…

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Julia Sexton: It’s common. It’s common for small to mid-sized practices, which still make up the majority of the industry, and only the larger firms are really able to specialize in some capacity and clearly own a role.

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Julia Sexton: So, this again is where there’s…

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Julia Sexton: generally a distinction, or where we can draw the clearest distinction between a CEO and a practicing partner.

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Julia Sexton: A practicing partner is an active wearer of many hats. Usually, the majority are the sole owner, so does still have a wide range of responsibilities working in the business, as well as on the business from an ownership perspective.

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Julia Sexton: Whereas a CEO is likely less client-focused, there still may be some client-focused there, some higher net worth, clients specifically.

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Julia Sexton: But more focus on the strategic business growth and growth objectives.

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Julia Sexton: So inherently, as you can see, it makes it a little difficult to structure appropriate compensation, on the executive level, but it goes back to being able to clearly define roles.

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Julia Sexton: On the trend side, also what we’re seeing is…

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Julia Sexton: More of the fixed salary for executives that’s trending towards being more representative of the duties and responsibilities of their role.

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Julia Sexton: So, for example, as I just mentioned, wearer of many hats. If you wear a CEO hat and a lead advisor hat, or a CIO and a lead advisor hat, not always needing to be an owner.

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Julia Sexton: How much of your time is spent wearing each of these hats in reality? That’s how compensation should be set to ensure scalability, ensure that there are multi-owner pathways.

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Julia Sexton: And that there’s strong enterprise value growth potential.

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Julia Sexton: The other important item that we are seeing, again, trends towards is a clearer separation between compensation for the role versus the return on your ownership. So this is a distinction

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Julia Sexton: That is crucial, because while you, an owner and an executive, see it collectively as your compensation.

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Julia Sexton: Poorly documented compensation for your actual role in the business, which is separate from your return on ownership, or your profit distributions you receive as also an owner, that makes valuation, succession planning, and enterprise value harder to defend and scale.

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Julia Sexton: We’re seeing on the bonus side, performance-based executive bonuses, so think…

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Julia Sexton: profit-based bonuses on the COO side, as I mentioned earlier.

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Julia Sexton: And then also seeing a much heavier use, which is great, of long-term incentive plans. So tools like Phantom Equity, where compensation is earned as a calculation of the overall value of the company, and then deferred, where it’s able to earn appreciation and company value over time.

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Julia Sexton: So, let’s shift gears just a little bit, in a sense of summarizing what we see as the total

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Julia Sexton: makeup of what we started the conversation with in terms of what does compensation mean as a whole package? What are we seeing as the trend in those breakdowns?

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Ryan Grau: Perfect. I’ll hop in here, Julio.

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Ryan Grau: So, with the breakdown, what we’ve talked about so far has been primarily focused on cash compensation. So, reason is, as you can see here, cash compensation makes up a lion’s share of compensation packages.

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Ryan Grau: However, with rising healthcare costs, growing families, health insurance benefits are a very important benefit, even though they’re not the largest portion of the compensation package.

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Ryan Grau: And this is one that I see in talking to advisors, where there’s some business owners that try to get very creative in passing the buck because

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Ryan Grau: insurance can be expensive, especially when you’re paying the premium for all of your staff members. So…

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Ryan Grau: Typically, what we see is that the premium for your staff, so anybody that is working for you on a W-2 basis, is that you’re covering the premiums for them.

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Ryan Grau: Now, family members, that typically is going to be on the employee. You know, that’s a decision that you have to make. We have seen some employers that do offer coverage for, you know, family members as well.

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Ryan Grau: Another large portion of the compensation package is going to be retirement planning.

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Ryan Grau: Now, retirement planning typically is going to be in the form of 401 contributions. There are many different 401K plans. Typically, what we see are matched contributions that you put in a dollar, we’re going to match a quarter to the dollar that you’re going to contribute in your 401 .

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Ryan Grau: Again, there are some other plans out there that are a little more creative, but what we’re talking about here are going to be more mainstream plans.

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Ryan Grau: And then lastly is the other employee benefits, and this is one that we get a question on often, what goes into the other benefits. Typically, it’s going to be things like, extended disability coverage, any sort of life insurance.

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Ryan Grau: Educational stipends, professional dues for, continuing education and such.

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Ryan Grau: And other fringe benefits, are gonna fall into that category, but that’s typically what we’re seeing.

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Ryan Grau: So…

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Ryan Grau: The key here is, if you really want to make sure that you’re staying up-to-date in the industry, in terms of your overall compensation package, it’s more than just

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Ryan Grau: Salary and bonus.

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Ryan Grau: There are healthcare considerations, retirement planning, and costs to support anybody in their professional development and their career.

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Ryan Grau: So, next, let’s talk about some of the trends and how roles within an organization change.

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Ryan Grau: So, typically in smaller advisory firms.

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Ryan Grau: Titles don’t necessarily define economic function. So a person may hold an executive title.

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Ryan Grau: But they still operate economically as an advisor. So, for example, often not uncommon for us to see somebody that’s holding the title of a president, CEO, or CEO more commonly.

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Ryan Grau: But they’re still very actively engaged in the day-to-day business, meeting with clients, serving clients. So…

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Ryan Grau: what we tend to see as firms continue to grow is that there starts to become separation of duties. So, understandably, you know, in a smaller firm.

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Ryan Grau: you have to wear many hats. There’s lots of jobs, lots of things that need to get done, so not only the owner, but also the employees are expected

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Ryan Grau: to fill those gaps and fill those roles. As the firm grows, as you start making strategic hires, that’s where we start to see the shedding of those responsibilities.

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Ryan Grau: to more specialized focus in various areas. So, as you can see here on the over $5 million, and this is gonna be off of, you know, top-line revenue.

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Ryan Grau: over $5 million, we start expanding. Not only do we have advisors and a strong support team, but we start seeing the introduction of actual C-level roles with dedication to those specific roles. Meaning.

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Ryan Grau: CEO isn’t somebody that’s out there bringing in clients and or servicing clients. Their sole role is focusing on the strategic direction of the company.

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Ryan Grau: Creating accountability, and assigning responsibilities to people within the organization, and checking in on progress to make sure that the firm is progressing in that direction.

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Ryan Grau: So, anything else that you wanted to add here, Julia?

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Julia Sexton: No, I think that’s great. I think the biggest thing to highlight that we have a couple of times now is…

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Julia Sexton: the…

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Julia Sexton: Role definition and the parameters that we put around the expectations, and how that can… is certainly a blurred line, so it just needs to be considered when we’re

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Julia Sexton: trying to reference data and feeling like we need to become anchored to the data. We don’t. It’s informational, it’s helpful to make decisions, but you have to understand, you know, how you classify something isn’t exactly how your peer, even of a similar size or structure, may classify.

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Ryan Grau: Yeah, and then one last closing comment on this before we move. So, from my perspective in doing valuation work, some of the more valuable firms that we see in this industry have

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Ryan Grau: defined organizational charts.

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Ryan Grau: They have career paths in place.

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Ryan Grau: They focus not on trying to find an advisor that’s already successfully established and built their own book of business and had the taste of entrepreneurship, but rather, they’re hiring people that are

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Ryan Grau: fresh out of college, that are looking to get their feet wet. They have systems and processes in place to help educate them, teach them the ways of the industry.

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Ryan Grau: But more importantly, there is structure, there’s intention behind how you get from the starting place to being a lead advisor at some point in the future. There’s a path on how you get there, so… and the other thing is that you shift away from that role overlap.

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Ryan Grau: So, stop, you know, if you start shedding the hats in serving many roles and scratching the surface in some of those roles, or just holding a title, and you’re fully committed to that role. You’re taking a much deeper dive to support the development of the organization in that actual specific role.

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Ryan Grau: That’s where titles start to become more important.

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Ryan Grau: As opposed to, you know, smaller firms where, you know, we have the title, but we’re also doing 10 other things.

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Ryan Grau: And then…

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Ryan Grau: want to touch on the compensation data. So what we have talked about here specifically has been national averages. So… and we know, you know, national averages, again, are not something that you should be anchoring to.

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Ryan Grau: But we have seen, as a result of remote work environments and hybrid work environments, that in order to recruit some of the best talent, you have to look outside of your geographical region.

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Ryan Grau: Now… there are certain areas, such as the Northeast and the West Coast, where

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Ryan Grau: compensation is expected to be higher, because there’s a pretty tight correlation to cost of living in those areas. So, if you’re looking to hire in those areas, just understand that

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Ryan Grau: Compensation, whether you’re at the service advisor level, executive, or even operational support, that there’s going to be expectation of higher compensation, because cost of living in those areas is much higher.

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Ryan Grau: On this map, I will say that the… the west… not the west coast, but the west region, there is some dilution in the data, and when we do our benchmarking, we don’t… we can focus on region, but we tend to focus more on per state, and where you’re looking to hire, where you’re located.

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Ryan Grau: The West is unique in that you have very highly populated metropolitan regions, especially, like, Seattle, Portland, San Francisco, LA, and a handful of state… or a handful of cities, major metropolitan areas in California.

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Ryan Grau: And then you have more of the interior states and exterior, including Alaska and Hawaii, but, like, Idaho, Montana, Nevada, Utah, Wyoming, and such are going to have a lower compensation off of the national average compared to the, you know, far west coast.

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Ryan Grau: So, there is some dilution in that data, which is why, again, we’d rather you not focus on the regional variations, but what we’re trying to show and illustrate here is that there is a correlation

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Ryan Grau: to cost of living, and there is a regional difference in compensation between the national average, West, Midwest, South, and Northeast.

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Julia Sexton: Perfect. The only thing I would add to that, in terms of the

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Julia Sexton: The process and the work that we do as well when designing

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Julia Sexton: compensation strategies, plans is, to Ryan’s point, looking a little bit deeper than regional, is looking at the influence of large metro areas and the influence that that may have on

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Julia Sexton: variations in compensation, so obviously there’s a lot to consider. There’s… nationally, that matters, but we want to start to filter down regionally, sure, because, for example, the Northeast probably doesn’t surprise most of us. If we were to just look at the West Coast, the results

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Julia Sexton: Probably wouldn’t surprise us, but it is important to… to see and group by region, and then maybe even to see and group by influences from large metro areas, and how that

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Julia Sexton: has an influence on what the comp data and benchmarks that you’re using to maybe even pull weighted averages of a combination of factors and considerations. Especially, again, to Ryan’s first point here, being in a remote environment and hiring outside of your state, or your metro area, or even your region.

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Julia Sexton: So, we’ll start to land this plane, and wrap up what we’ve talked about today, and what I want you to head into 2026

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Julia Sexton: considering. Leaders, listeners today, what I want your takeaway to be is to start thinking about compensation as

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Julia Sexton: More than just a payroll expense. It is a design tool, and your compensation plan can’t be something that you just check the box on.

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Julia Sexton: Because if not now, at a certain point in your business’s lifespan, you’re gonna need help with compensation strategy and development of a plan, and ensuring that it works now, sure, but that it continues to align with your business strategies and continues to support your enterprise growth.

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Julia Sexton: A lot of business owners think they can do this on their own, but what they have found, what we have found working with those that thought they could do this on their own, is that you end up so far down the wrong path that your team becomes very anchored in a system that you then have to overhaul.

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Julia Sexton: Whereas the goal should be keep up with the strategy enough that you can refine it periodically, rather than having to overhaul it. Because we’ve seen both, I have seen both, and the overall path inevitably ends in fallouts, or…

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Julia Sexton: some really complex halfway hybrid stage, where you have some people in a legacy model, and some people on a new model, and that is so much harder to manage practically, so much harder to align your goals around. It will become disruptive.

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Julia Sexton: it will become complicated, which I know nobody wants to manage. We’ve heard it firsthand.

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Julia Sexton: Also, Having your compensation model.

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Julia Sexton: Dialed in will determine more of your business’s future than you may be willing to believe right now.

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Julia Sexton: Having that dialed in will help you determine, or not, will help you determine whether or not an internal succession planning strategy is viable for you, whether or not your financials or your margins support your desired exit strategy, or erode your firm’s value.

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Julia Sexton: It can even impact financing during transaction processes when leverage shifts and options narrow. So, what I and SRG help

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Julia Sexton: Business leaders and business owners do is actually help facilitate the strategy development, the design, the implementation, all of a compensation plan, to become more intentional and align the execution of your plan with your actual goals.

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Julia Sexton: This starts with…

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Julia Sexton: Building that career path for each role. Figuring out, then, how and where you align compensation with behaviors and outcomes by setting clear goals and designing intentional bonuses, because, as I mentioned earlier, compensation drives behavior.

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Julia Sexton: We then help teams document your plan clearly, because the best way to fail your team and create frustration, disappointment, and then turnover is to not clearly define a pathway to success.

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Julia Sexton: If you don’t have a clear definition of success per role yourself, how the heck’s your team gonna know what it takes to succeed and grow?

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Julia Sexton: Once you have a clear path designed, the question becomes, how do you keep this up to date and evolving with the industry? I would say that’s the…

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Julia Sexton: You know, number one question is, what’s the maintenance?

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Julia Sexton: I…

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Julia Sexton: It seems simple when I say it out loud, but the answer is, stay up to date with the industry. Annual compensation research and staffing benchmarking is so critical to help you stay proactive instead of becoming reactive.

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Julia Sexton: And productivity is how you remain intentional with your design.

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Julia Sexton: So, this is also arguably one of the easiest steps in this whole process, because you’ve already determined the strategy, you’ve built the plan, now you just have to keep it up to date, and retain its value.

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Julia Sexton: It’s like buying a home, gutting it, flipping it, increasing its value exponentially, and then never touching it again, and never maintaining it, and expecting it to keep up with the growth in the market 10, 20 years from now.

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Julia Sexton: So I said I’d come back to it, but I briefly mentioned the talent strategy report earlier within the context of annual benchmarking.

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Julia Sexton: But we have tried… I have tried to make this task as simple as we know how to for you.

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Julia Sexton: through this report, because we’ll update you on industry compensation ranges, staffing trends nationally, regionally, size applicable, based on proximity to large metro areas, as I just mentioned. So, all you have to do is implement this step into your annual review process.

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Julia Sexton: Each year, you’re already looking at your team’s performance, you’re closing your books, you’re setting goals, budgets for the next year, communicating raises, promotions. Now, just add industry compensation benchmarking to your list.

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Julia Sexton: And maybe make some minor tweaks, updates to your model with the results from the research to help inform you of staffing compensation changes for the overall package.

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Ryan Grau: I’m hurt, Julia. You did not have valuation in that list of annual updates.

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Ryan Grau: We’re updating your entity documents.

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Julia Sexton: You know, today’s not about you, Ryan.

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Julia Sexton: Lastly, start encouraging your high performers to think and act like owners. Invite them into higher value rewards, like equity… excuse me, phantom equity sharing plans.

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Julia Sexton: Or other long-term incentive plans. But essentially, you know, have a clear pathway, at the very least, to one of these options.

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Julia Sexton: Maybe with that long-term goal being real equity participation.

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Julia Sexton: Because these are all…

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Julia Sexton: tools that many teams are starting to leverage, even regardless of their size, be it a one-owner, one-employee practice, or an already multi-owner firm with dozens of employees. You know, not everyone can be the one to pave the way with these

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Julia Sexton: new and amazing ideas. Not everyone wants to be the person or the team to pave the way.

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Julia Sexton: Luckily for you, this isn’t you paving the way, necessarily. This is becoming more commonly used as a key reward and…

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Julia Sexton: Tool for retention, and we can definitely help you learn why it is an ultra-valuable tool, your options that you already have within the context of these plans and these tools.

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Julia Sexton: And probably just either plans or options you haven’t capitalized on yet, or maybe you do have some form of this that you’re using, and just have an opportunity to use it in a more effective way.

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Julia Sexton: Alright, so I said we’ll wrap this up. We’ll actually wrap this up today with a quick recap of the common compensation do’s and don’ts. I really don’t want you to miss,

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Julia Sexton: the…

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Julia Sexton: phrase at the top of this slide, so I’m gonna read it for you, which is that compensation systems don’t usually fail because they’re unfair, they fail because they’re unclear, inconsistent, or misaligned with what the firm is actually trying to build.

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Julia Sexton: So we’ll start with what we see working well, and why it works well.

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Julia Sexton: The firms that do very well with

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Julia Sexton: compensation and creating strategies that align with business goals, and using these as strategic tools, and not just as a payroll expense. They are the ones building career paths. As I’ve mentioned, as Ryan mentioned.

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Julia Sexton: So that employees can understand what growth looks like. When someone knows what skills, behaviors, and results move them forward, again, compensation becomes motivating instead of this mysterious unknown.

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Julia Sexton: Strong firms are also defining what success looks like in each role. They’re not paying for activity, they’re paying for outcomes that support the firm’s long-term goals, because that clarity reduces frustration on both ends.

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Julia Sexton: Another practice that we’re seeing more often that I just mentioned

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Julia Sexton: is inviting those high performers into those high-value rewards. Again, phantom Equity, other long-term incentive plans, real ownership opportunities. When we have alignment there, when your top people start to think like owners, they’re gonna start to act like owners.

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Julia Sexton: And then, last but certainly not least.

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Julia Sexton: Document everything. The expectations, incentives, metrics.

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Julia Sexton: Timelines, because having any of this be a surprise is the fastest way to erode any sort of trust that you’ve created in a compensation plan.

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Julia Sexton: Not that I want to focus necessarily on the don’ts, but it’s important to be able to see what commonly creates tension, in case this resonates with something you’ve heard, or seen, or hopefully not, but may be doing.

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Julia Sexton: One of the biggest mistakes we see in designing compensation is doing so in isolation. Maybe this plan that you have was built years ago. Maybe it was inherited. Maybe it was designed around one key employee.

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Julia Sexton: But again, if it’s not tied to your current structure and your current business goals and strategies.

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Julia Sexton: It starts to drive the wrong behavior. We have misalignment.

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Julia Sexton: We also still see firms relying heavily on production-based compensation, even when compensation is…

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Julia Sexton: Excuse me, collaboration is critical to your service model, because if you’re still rewarding individual production in a team-based firm, you are still unintentionally creating silos.

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Julia Sexton: And then leaders wonder why collaboration, delegation, and role specialization

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Julia Sexton: Aren’t being leveraged to help grow and scale.

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Julia Sexton: Another common issue is… letting compensation outgrow the role. Sometimes high performers get raises over time, but without

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Julia Sexton: a clear plan or path for that growth or progress, and responsibilities haven’t evolved. So eventually, you start paying executive-level compensation for mid-level impacts, and that’s obviously going to create some internal equity tension.

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Julia Sexton: And finally, it’s actually the first on the list here on the right, one-size-fits-all plans almost never work in advisory firms. I mean, in any firm, for that matter. But, point is, different roles create different

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Julia Sexton: great value in different ways. So, you know, if you’re trying to apply the same compensation philosophy to your advisors, the same as your operations roles, the same as your leadership roles, this is gonna lead to some misalignment.

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Julia Sexton: Ultimately, what I’d want you to take away, in addition to everything I’ve summarized on this slide, is that compensation

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Julia Sexton: is culture in numeric form. It signals what you value, it reinforces behavior, it influences retention, and if it is structured intentionally, I promise you it can become one of the most powerful strategic tools that you can have going into 2026.

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Julia Sexton: I mean, I’m impressed. We finished this with one minute to spare. I’m sure there are questions that have come in. We obviously love to hear from you guys. Do we want to tackle one or two of these in particular, Ryan? And anything else we can, of course, follow up with?

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Ryan Grau: Yeah, let’s tackle two of them, because that’s what we have right now in the chat, and we’ve got some time.

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Ryan Grau: So this one is for you specifically, Julia, because the person asking the question

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Ryan Grau: received a call and missed your question, and I was answering questions, and I missed it too. So, so you were saying that having a defined… or having defined compensation for the role separate from profit distributions as an owner will only help when it comes time to sell.

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Ryan Grau: That’s the part that they caught.

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Ryan Grau: Eric, yeah, so was she saying that having a defined compensate… having a defined compensation for the role separate from profit distribution as an owner will only help when the time to sell? So, it gets… going to deferred compensation.

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Julia Sexton: Yeah, what I interpret that also is on…

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Julia Sexton: Paying, or defining compensation, setting compensation for your role in the business, versus then compensation

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Julia Sexton: that you receive as your return on investment by being an owner. So that’s the differentiation between

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Julia Sexton: whether it’s categorized as W-2 salary, 1099 compensation, something else, there’s compensation for your role, and your responsibilities, and you actively working on the business, and then there’s compensation for you as an active owner, and that comes, of course, in the form of profits at the end of the year.

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Julia Sexton: So the short answer to the question, I would say, is no, it’s not only going to help upon sale or exit, it will certainly help during those transitionary phases as well, whether it’s fully retiring and exiting, or an internal succession strategy, but that’s also the point, is that this

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Julia Sexton: is critical to be able to have all of those options. We don’t want to… unless you’re real close to retirement, you have an entire, you know, strategy that you’ve worked off of, and you’re just planning to exit.

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Julia Sexton: this year or next year, alright, well, maybe a different story, especially if it’s not going to be an internal succession. But the point is, it limits your options if you don’t have that delineated, not only from a value perspective, but a

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Julia Sexton: Strategic succession planning perspective.

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Ryan Grau: Then, next question for you, and last question before we close out here. So I had alluded to, in my conversation about, kind of.

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Ryan Grau: either end of the spectrum, so advisors often looking for an experienced advisor with a book of business, which is the vast majority of advisors out there, that’s who they want to hire, somebody with an established track record that can also bring in a book of business, because that basically means they’re going to pay for themselves.

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Ryan Grau: And then the other end of the spectrum, hiring fresh out of college. So the question is, what about the in-between? So somebody that does have experience, but probably under restrictive covenants, they leave the firm, they’re not bringing the book of business with them.

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Ryan Grau: So…

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Ryan Grau: Let me see what the specific question is here. Yeah, so they need less training, they have higher capacity to service your clients, and where do you see them fitting into the mix?

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Julia Sexton: I mean, I hate to respond with, it depends. Obviously, it would depend, so I’ll give the short answer, which is…

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Julia Sexton: what… level of experience do they have? Like, it’s probably a good idea, of course, to know

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Julia Sexton: what the role is that they’re coming from. You know, of course, assuming they have experience, are they coming from a firm that paid them like a lead advisor? Those are things that you would want to know, too, just from a pure…

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Julia Sexton: compensation perspective of what would make sense. So it’s a combination of, you know, in that specific instance, they’re coming from something, so if you’re trying to…

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Julia Sexton: attract talent that has experience. You want to make sure that you are competitive, one. Two.

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Julia Sexton: Designations, specific education, that can be… those are elements that can help set someone apart.

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Julia Sexton: Specifically, again, the questions around compensation and setting that initial compensation, those are things that can set them into the median, or that third quartile, so the upper end of the range of what a typical range for compensation is.

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Julia Sexton: Then beyond that, as we can see, you know, it’s not just the salary, it’s the opportunity to earn bonuses based on their performance. So, having those very intentional bonuses that will fit their role, if you can…

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Julia Sexton: clearly define what their role will be. Are they going to be a hybrid service advisor, where they’re focused on client service and maybe bringing in some business? Are they going to be focused as

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Julia Sexton: the hunter for your team, and just bringing in new business and not really focused on servicing. All of that will help determine, you know, where do we need to put more weighting for compensation in this specific advisor.

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Ryan Grau: Yeah, and I’ll add on to that just some of the…

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Ryan Grau: I’ll say more emotional factors to it, that the hard thing with hiring somebody that is experienced is making sure that they fit the culture and the investment philosophies that you may have within your organization, or that your clients value.

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Ryan Grau: So, there are lots of different approaches to asset and portfolio management out there. So, you know, making sure that you have the experience, that you can show and demonstrate, and most importantly, quantify the experience that you’re bringing to the table.

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Ryan Grau: that you’ve brought to the prior organization. That way, as you’re stepping into this new role, they have an understanding of what your knowledge, skills, and ability are, and your capabilities.

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Ryan Grau: So, we will, since we’re 5 minutes past time, we’re gonna wrap up there.

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Ryan Grau: So, anything else that you wanted to add in closing, Julio?

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Julia Sexton: No, only thing I will say is I hope everyone could hear most of me this presentation. Just got a note from the team that audio was a little bit in and out, maybe in the beginning, so hope you guys caught the gist of it anyways. Sorry about that.

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Ryan Grau: Sounded all clear to me.

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Julia Sexton: Perfect.

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Ryan Grau: But also on the same platform, so…

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Julia Sexton: Alright, guys. Thank you.