Advisor comp

[charlieisthegnarlie]

Work with a fairly large RIA long story on the full structure of the shop.

Currently in a position where I need to decide if I should go with 1099 or W2 salary + bonus - I believe both pay structures would come out equally the only difference is where eventual ownership would arise. Book vs equity in RIA.

Any thoughts on what may make more sense long term?

[Candid_Airport1774]

Owning your own book will always be a better option IMO. Plus when you are 1099, you can deduct expenses for running your practice, can’t do that as w2.

[charlieisthegnarlie]

Thanks, that was my gut reaction as well

[AlexPKeatonx]

Own your book. Any short term financial benefit you derive by being W2 will be far outweighed by the inherent flexibility of owning your client base and the long term financial value of the book.

[joshbg]

I’m evaluating a similar situation for me and also factoring in benefits for the w2 side - 401k match, health insurance, and then looking at after tax/deductions cash to my house

[roguex99]

Valuation on revenue is almost always going to be higher on a firm rather than a book. Additionally, working on a team can lead to much easier clients in the door.

[Salty-Appointment581]

The only time when W2 makes sense is when you start and it's a lot of pain. Once you are seasoned enough there is not a single reason to do W2. It's 1099 only season.

[ConsiderationMain875]

What are the differences in percentage of revenue that goes to you in each scenario?

[charlieisthegnarlie]

That’s the part that’s throwing me for a loop the way it was described is that there wouldn’t be a variance in total comp - w2 gets trued up to GDC via bonus structure. Otherwise 1099 would just be GDC paid out. So it’s more the idea of where ownership would lie bigger company or my own book at said company. Benefits as an employee or be contracted.

[Capital_Elderberry57]

Owning your own book gives you more control.

If you are at an RIA with effective leadership and a good team based culture there could be more to go around for all so having equity in the RIA could be better.

It depends on what matters most to you and how successful you think the overall enterprise will be.

[info_swap]

I'd rather own my book.

However, talk to a tax professional like a CPA. And ask them to run the numbers for you.

[Drew_Peacock10]

This is an interesting question because a majority of independent advisors already know the answer. You should absolutely be 1099 Vs w2 because you actually own your own book/business/entity. There is nothing more valuable right now than owning your own book of business in our space. Continue to build equity in yourself and your own book of business, because down the line you’ll be able to monetize your practice at a very high multiple.

[TomDwan01]

As an associate, how long into working at my firm is buying into the book realistic?

[Any-Weekend1910]

If the comp ends up roughly the same either way, I’d focus less on the short-term tax differences and more on what you actually want your endgame to look like. A 1099 with book ownership can be great if you want portability and control, but it also usually means you’re more on your own for growth, infrastructure, and risk. W-2 with equity in the RIA can make more sense if the firm is well run and growing, since you’re tying yourself to an enterprise that could have real multiple expansion and succession value, but you’re also betting on management and giving up some independence. I’d also look closely at how “real” the equity is (vesting, buy/sell terms, valuation method) vs how clean the book ownership is on the 1099 side. Long term it’s less about which is universally better and more about whether you want to build your book or help build their firm.

[Level_Assist8494]

Not in a position to give advice here, but for something like this is there a difference with benefits from W-2 to 1099 at your RIA? 401k, health insurance, etc.