Financial Advisor Compensation Guide for Advisory Firm Owners

Compensation is both the engine that drives a service-based advisory firm and the issue that keeps firm owners up at night. Everyone wants to pay their people fairly, but what fair looks like depends on your firm’s size, structure, growth goals, and the roles people actually play on your team. The challenge is that many advisory firms are still running compensation models that were designed for a different era; one where individual production was the primary measure of value and every advisor operated as a standalone business under a shared brand. Those models worked when the industry looked that way. For many firms, the industry no longer does. In a recent episode of The Fine Print Podcast, David Grau Jr. sat down with Julia Sexton, CVA, who leads SRG’s compensation design, employment agreements, and equity sharing services, to walk through the key decisions that firm owners face when redesigning compensation. This article distills that conversation into a practical guide — organized around the decisions you need to make, in the order you need to make them. Start with the Data: Know What the Market Is Actually Paying Before you redesign anything, you need a reliable baseline. Strategy aside, if your compensation is 40% above or below the market for similar roles, you have a problem that no structure can solve. For years, the industry relied on the Investment News / Moss Adams compensation study as the go-to benchmarking resource. It had an interactive dashboard where you could filter by firm size, region, and role. That resource was eventually shuttered, and while it has returned in a free version, it now pulls from government sources rather than industry-specific survey data — making it significantly less reliable for advisory firms. SRG developed its Talent Strategy Report (TSR) to fill that gap. Rather than relying on self-reported survey data, the TSR draws from thousands of valuations performed annually — meaning the compensation data has been vetted, reviewed on calls with firm owners, and confirmed for accuracy before it enters the data set. The report covers compensation by role, firm size, and staffing benchmarks so you can see what peers at similar-sized firms are paying and how they are staffing. A few things worth noting from the data: Location matters less than it used to. With remote work now standard at many firms, geographic premiums have compressed. Compensation for the same role is more consistent across regions than it was five years ago. Firm size does not create as big a gap as you would expect. A lead advisor at a $3 million firm and a $7 million firm often earn similar total compensation — but for different reasons. Smaller firms tend to pay more per person because each person wears more hats and larger firms requiring more bodies are able to specialize more in each role. So maybe at the core, a larger firm is ‘paying more’ for the core duties of the specific role, but the reality is that smaller firms have similar if not the same tasks and responsibilities, just shared across less people – so we don’t see this changing. You should be checking this at least annually. Compensation benchmarking is not a one-time exercise. At minimum, pull updated market data every year — every other year at the outside — to make sure you are staying competitive. The bottom line: any compensation redesign should start with current, reliable data. If you are working from a study that is three years old or based on a survey with a few hundred respondents, you are building on a shaky foundation. Choose Your Model: Grid-Based vs. Ensemble Compensation This is the foundational decision, and it flows directly from a bigger question: what kind of firm are you building? Grid-based (production-based) compensation assigns each advisor a book of business and pays them a percentage of the revenue they manage — typically 30% to 45%. It is simple, familiar, and effective at incentivizing individual production. It is the model that most of the industry grew up on, originating in the wirehouses and migrating to the independent channel as advisors went out on their own. Ensemble (team-based) compensation pays advisors a base salary reflective of their role and responsibilities, with variable bonuses tied to specific goals and behaviors, and potentially a share of firm profits. It is designed to incentivize collaboration, specialization, and enterprise value. The critical insight is that your compensation model will drive behavior whether you intend it to or not. If you pay advisors on individual production, they will optimize for individual production — even if you tell them you want collaboration. You cannot put the incentives in one place and expect behavior in another. About 95% of the teams we talk to say they want to build a collaborative, team-based firm. Yet many of them are still running a production-based compensation model. If that describes your firm, the structure and the strategy are in conflict, and compensation will win that fight every time. That said, grid-based compensation is not inherently wrong. If your firm genuinely operates as a collection of individual practitioners under a shared brand — what we sometimes call a “team in name only” — then production-based pay is aligned with that reality. The problems arise when the stated goal is collaboration and scale, but the compensation model still rewards siloed behavior. Before redesigning anything, be honest with yourself about your firm’s long-term goals and strategy. Are you building an integrated enterprise, or are you running a platform for independent advisors? Either is valid. But the compensation structure needs to match. The Hidden Cost of Grid-Based Compensation Even if a grid-based model made sense when your firm was smaller, it can become a serious liability as you grow. Here is the math that tends to catch firm owners off guard. You assign an advisor 100 households representing $100 million in AUM and $1 million in annual fees. You give them a 30% payout. They earn $300,000. Simple enough.

2026 State of Compensation: Pay, Equity & Incentives for RIAs and Advisory Teams

Watch the Replay Is Your Compensation Plan Helping You Grow or Holding You Back? Not sure what to pay your advisors and team in 2026, or whether your current compensation plan is actually competitive? In this on-demand webinar, SRG breaks down real-world compensation benchmarks for RIAs and advisory firms, including salary ranges, bonus structures, phantom equity, and staffing trends across advisor, operations, and executive roles. Using data pulled from valuation and compensation analyses, you’ll see what firms are actually paying and how to align incentives with the behaviors you want, so you can attract and retain talent without letting compensation outgrow the role. Download the Presentation Deck Here Download Speakers Host Julia Sexton, CVA Director of Strategic Organizational Planning Paper-plane Linkedin-in Host Ryan Grau, CVA, CBA Director of Valuations Paper-plane Linkedin-in

Equity Compensation: A Technical Comparison between Restricted Equity Grants

Please enable JavaScript in your browser to complete this form.Please enable JavaScript in your browser to complete this form. Name * FirstLast Phone Work Email *How Did You Hear About SRG? *— Select Choice —ConferenceDirect MailExisting/Past ClientGoogle AdWordsOtherReferralSocial MediaSeminar/WorkshopWebinarWebsite Download Empower your team and strengthen the long-term health of your business with SRG’s “Equity Compensation: A Technical Comparison Between Restricted Equity Grants” white paper. This practical, easy-to-understand resource breaks down the key differences between Restricted Stock Awards (RSAs) and Restricted Stock Units (RSUs) — two of the most common tools for sharing ownership value and aligning employees with your company’s future. Whether you’re designing a new equity plan, preparing for growth, or looking to retain top talent, this guide clarifies the structural, tax, and ownership considerations every business owner should understand. From grant mechanics and vesting to 83(b) elections and S-Corp compatibility, you’ll learn how each approach impacts control, complexity, and long-term planning. Explore how the right equity strategy can motivate your team, support succession goals, and protect the value you’ve built. Download the white paper today and make confident, informed decisions about equity compensation.

Breaking the Cycle | Compensation Strategies That Protect Value & Drive Growth

Valuation expert Ryan Grau, CVA, CBA, and compensation strategist Julia Sexton, CVA, reveal the most common comp mistakes—and how to fix them. Learn how to build pay models that drive growth, retain talent, and preserve business value. Watch the Replay Host Julia Sexton, CVA Director of Strategic Organizational Planning Paper-plane Linkedin-in Host Ryan Grau, CVA, CBA Director of Valuations Paper-plane Linkedin-in

The Future of Business Growth with Julia Sexton (Ep. 13)

Creating a Winning Compensation Plan (Ep. 10)

The Financial Advisor’s HR Toolkit

Download Your eBook! Please enable JavaScript in your browser to complete this form.Please enable JavaScript in your browser to complete this form. Name * FirstLast Phone Work Email *How Did You Hear About SRG? *— Select Choice —ConferenceDirect MailExisting/Past ClientGoogle AdWordsOtherReferralSocial MediaSeminar/WorkshopWebinarWebsite Download Streamline Your Practice with These Essential Tools Effective personnel management, including formalized employee agreements, equity sharing, and compensation plans, is equally crucial to the success of your financial practice as well as that of your team. Our toolkit is designed with all the essentials you need to manage your HR processes effectively, saving you time and increasing your efficiencies. Here’s what you’ll find inside: Expert recommendations on employment agreements Best practices for compensation Key elements for clear job role descriptions Guidance for creating a career path for your team Our toolkit is designed to help you improve your employee satisfaction, increase retention, and better align employee compensation plans with business initiatives. Complete the form to receive your free HR Toolkit today!  Learn more about SRG’s Employment Resources and Equity Sharing services. Schedule your free consultation below!

SRG Off Script: Advisor Compensation

In the latest of SRG’s monthly webinar series, SRG Off Script, David Grau Jr. and Nicole Frey, CFP® address the topic of employee compensation and talent retention in your business. SRG Off Script is a monthly webinar series hosted by President David Grau Jr. David along with other industry experts provide insight and address questions related to all stages of managing a financial practice. Have a request for future SRG Off Script session topics? Let us know at registration or email marketing@successionresourcegroup.com Watch Recording Resources Five Best Practices To Create An Effective Compensation Plan → Five Building Blocks of an Attractive Compensation Model → Learn more about SRG’s Employment Resources service. Schedule your free consultation below! Presenters David Grau Jr., MBA President/Founder Nicole Frey, CFP® Project Manager

Five Best Practices To Create An Effective Compensation Plan

Many companies have spent significant time and effort in recent years to move away from the traditional one-size-fits-all type compensation plans and instead favor a more customized solution. However, the challenge to achieve desired results in attracting and retaining talented workers, within company means, remains prevalent. While at times the issue may be poor job role, poor culture fit, or external circumstances beyond the employer and/or the employee’s control, more often than not the lack of success is the result of a misalignment of the compensation plan with the worker’s role in the company and incorrect implementation practices. Most of these occurences can be avoided if the following best practices are maintained: 1. Tailor the Compensation to the Employee’s Specific Role To create a compensation plan that achieves the desired results, it is important to provide compensation elements that incentivize certain behaviors. Here, the focus should be on an employee’s particular role and strengths as well as the company’s needs to maximize the return for the expended efforts and the compensation paid. For example, if an employee excels at business development, the bonus structure should reward him or her for new business brought to the firm rather than for a certain quantity of financial plans produced or client meetings held. If, on the other hand, an employee is skilled at client service but, typically, does not bring in a lot of new business, the bonus structure should emphasize the service element such as the number of financial plans produced, and pay an attractive bonus. It is important to keep in mind that additional bonuses may still be paid on other activities that are beneficial to the company but do not pertain to the employee’s particular job role or strengths. However, such bonuses should not be the main element of the compensation plan. 2. Communicate Expectations and Results A compensation plan is only as good as the company’s communication of its expectations and intended results. Such communication is more effective if it acknowledges a reciprocal relationship between an employee and the company and therefore includes the expectations and results for both parties. This is typically accomplished by outlining the employee’s qualifications and responsibilities as well as the company’s commitment to career progression and compensation in a career path summary for a particular job role. The details outlined in the career path summary should then correspond with the elements of a compensation plan that is specifically tailored to a particular job role level. Both career path and compensation plan should be reviewed periodically and potentially adjusted to make sure they are clear and achieve the desired results. 3. Use SMART Goals As an employee’s goals are determined, it is best practice to set SMART goals to maximize his or her performance and promote job satisfaction. SMART goals are: Specific (direct/detailed) Measurable (quantifiable) Attainable (realistic) Relevant (aligning with the company’s mission) Time-based (deadline driven)   Using these metrics will ensure that team members do not feel overwhelmed and challenge themselves to achieve their goals. 4. Align Performance & Compensation When it comes to using compensation as a means to incentivize performance, timing is everything! For best results, compensation should closely follow performance. This ensures that the employee associates the reward with their behavior and is more likely to repeat the desired behavior. The more time passes, the weaker this association will be. 5. Stay Within Company Means The pressure on companies to offer attractive compensation plans is tremendous given today’s competition for talented workers. As a result, many companies use compensation studies to determine how much they will need to pay an employee to beat the competition. Compensation studies, however, should be used with caution since they can include a broad range of participants and often communicate only one particular aspect of the employment relationship – compensation – and they might therefore lack information with respect to required work hours, level of skills and responsibilities, other perks, etc. For some firms, the use of compensation studies can put significant strain on the company’s financial health if the compensation benchmarks exceed the company’s financial resources. To avoid profitability issues, it is therefore important to ensure that: Revenue ranges are determined based on the company’s financial means, Any overlap in compensation is eliminated (i.e., paying multiple bonuses for the same activity), and The calculation of the bonus amount is predictable.   To avoid profitability issues, some companies are inclined to impose caps on bonuses paid. However, depending on the circumstances and the type of bonus paid, the bonus amount may not need to be capped, for example, if the generating capacity of any new business sourced by the employee exceeds the bonus payment. A bonus cap has the tendency to restrict high performers and slow down company growth. In summary, for a compensation plan to yield the desired results, the process should start with the end goal in mind and then focus on how each employee can help reach such goal based on their particular job role. Once the goal for the company and the associated goals for the employees have been established, a compensation plan can be created that drives the behaviors needed to accomplish the company goal by tying behavior to compensation.

Five Building Blocks of an Attractive Compensation Model

Hiring and retaining talented employees is a top priority for most business owners. Effectively doing so has become increasingly difficult in the financial services industry. The number of advisors approaching retirement and exiting the industry far outweighs the number of new advisors joining. This gap is further exacerbated by the Great Resignation. As a result, organizations are struggling to find the human capital needed to grow their business and plan their internal succession.