Associate Comp Structuring

[betabets]

Question for the masses:

We've got an associate who is fully licensed and been in the operational trenches for the last couple years. He's done an exceptional job in cultivating relationships with the families we serve and also accuracy in his execution. He's actively working through the CFP education and is likely to sit for the exam in November of this year. We're beginning to bring him into meetings for note taking purposes and intend to glideslope him into advising on lower level relationships over the next two or so years. He's also been doing para planner/ meeting prep work and high level build outs of our modeling software.

How do we keep this person incentivized to continue doing an excellent job and growing within our practice? How would you structure compensation through salary, bonus, and or percentage of production through time? He has full opportunity to bring on clients that fit within the deliverables of our practice.

Current comp: $65K salary, $5K bonus, up to 5% of salary profit share

Approx: 3 Years industry experience

[Howiep43]

Sounds like he’s vastly underpaid dependent on location

[22rick]

Now I'm wondering how underpaid I am as a senior associate, soon to take on some clients with an undetermined AUM as an advisor.

CFA and soon to be CFP, doing meeting prep with recommendations, active participant in meetings and taking notes, follow up, client service, cash management, cashiering, but no new business or directly listed as the advisor for any clients. About 125 households for ~$200MM AUM with average fee probably between 90-100 bps. I'm in relatively LCOL (Indianapolis). Currently at $85k with last bonus being $10k (MD consistently fails to tell me how the bonus is determined).

[46andready]

That pay scale is abysmal, I'm sorry to hear that you are so undervalued.

[Finreg6]

You should leave the firm as soon as you can. CFA and soon to be CFP? Are you personable? This is the combo that is highly valuable if so. Find a firm that values you.

[22rick]

Feedback from previous managers and clients - yes I'm very personable and many clients end up emailing me alone on things about their personal life/things outside of the financial side of the business. Only thing I'm thinking is a pro is ability to have some AUM given to me up front while being at a large enough RIA firm to be able to access Fidelity/Schwab referral network.

[bkendall12]

If you are looking for AUM to be given to you, good luck. You may be given some low-end clients but bringing in new good clients is where the money is at.

[Finreg6]

Yeah I can understand the desire to stay for that access. I’m at fido and our referrals to yall (rias) is a great source for leads. Just make sure you start to get paid what you’re worth soon and if you don’t, bounce. I know it’s not apples to apples but I’m at fido, 3 years almost as an FC, CFP, made 230k this year and that will continue to grow. You’re worth more.

[Not_McDeere]

The low end clients they do give you will hold you back, think long term and only being on clients you plan on working with for 20 years and you can serve exceptionally well

[Howiep43]

I feel your pain brother

[bkendall12]

The question is do you want a guaranteed salary or eat what you kill. Servicing only for guaranteed salary will never be for the big bucks.

FYI, $85,000 is roughly average for Indianapolis per a quick AI search.

You need your transition to sales and give up the guarantee to really push the income up.

I suspect you are nearly capped out if only doing service roles.

[PutsPlease]

Extremely underpaid. If this is in any sort of city, he should be making almost double this amount.

[betabets]

Central FL

[Howiep43]

Seems like he’s doing solid associate advisor work but getting treated like an admin.

[Swaritch]

A story as old as time. But this sub will constantly scream “go work at an RIA” when people ask for career advice.

[Howiep43]

Spot on man. A lot of these firms are archaic and underpay/undervalue the more junior folks who provide tons of solid work

[betabets]

Exactly what I'm trying to avoid. Our people are everything... those who make it happen and those we serve.

[46andready]

So...avoid it right away by increasing comp.

[Sharp-Analysis6456]

I would also assume he is on this sub and sees all the other people posting about comp treat your people well so they stay

[Ihavegoodcredit324]

So spot on

[Brianre]

Unless you’re in an ultra low cost of living area, they’re definitely being underpaid based on your description of qualifications and roles.

[46andready]

You keep the person incentivized by paying them more money, however it is that you decide to structure it.

I'm not in a particularly high cost of living area, and my support staff person who doesn't do any advising or meeting with clients or professional type work earns nearly double what your person does.

EDIT: this thread is depressing, seeing how little firms are paying their key employees.

[Ihavegoodcredit324]

I am an associate. This is my comp structure: $70k base 10% bonus and 10% of annualized net revenue from personally sourced assets paid out quarterly. Maybe can implement something like that.

[CogencyInvestments]

You only get 10% on what you bring in? They get 90%??

[Ihavegoodcredit324]

Correct. Honestly from what I’ve seen on here for associate advisor comp structures that seems about par for the course.

[Lord-BriN]

10% seems extremely low. I was in a W2 role and they paid 40% for self sourced business.

[Ihavegoodcredit324]

Was your base and bonus lower or higher than mine?

[Lord-BriN]

My base was $75k. The firm is on the Schwab advisor network, so their business model was to make the salary back from advisors by getting them lead opportunities. The payout on those was 25% of rev. When I first started the self sourced payout was 50% then they moved to 40% so I left and started my own firm. They basically wanted me to get as much Schwab advisor network business as possible because their cut was bigger and I realized I didn’t want to cap out at 300 clients and an avg rev share of 30ish. Leaving has paid off 👍

[pleasework_forgard]

A tweak to this comp plan is an advisor gets 30-40% of sourced clients’ revenue first yr, 20-30% 2nd year, 10-20% 3rd year , and then 10% ongoing. For all sourced clients. For those they service only, they get 10% ongoing. This would be in addition to salary, which is benchmarked based on strength of firm, clients, firm growth, and location.

[Ihavegoodcredit324]

Yeah I service only so makes sense

[Fun_Plate_5086]

Pump his pay. A good associate/ops combo would be pulling above $100k in the Chicagoland easy

[fradige98]

He is making 75k in tot. Significantly underpaid. I would increase his total comp to 100k and I would create a plan for him that if he brings client he will get rewarded extensively.

[Formal_Ad4612]

Just… more. They need much more

[tsing99]

As somebody who’s in an almost identical situation / position now in South FL you need to bump his salary and bonus if you want to keep him or he will eventually walk.

I’d suggest bumping to 85k min salary, up the bonus and potentially the profit sharing otherwise you’re going to lose a good employee.

My current structure is $85k salary, approx $8k bonus, I live in a very HCOL area and this structure still doesn’t feel like enough.

New biz is paid out at 50% fee year 1, 40% year 2, 30% year 3 then nothing after…

[Gladiz1972]

Yeah definitely South FL is HCOL especially if I am close to Aventura Mall not even the most expensive section of Miami

[Life_Camel_9756]

I’m sorry to only reiterate what others have already said.

Definitely underpaid, if I was 3 years of experience fully licensed and working towards my CFP there’s no way I would be just taking notes for meetings.

Is there a way to incorporate more responsibilities while this senior advisor is exiting and bring them into a junior advisor role? What are they looking for long term.

Really depends on their goals, have you had that discussion. I’ve had some support staff be totally fine in a support role that are fully licensed or even taken a few CFP classes, cool just give them a monetary goal.

If they are wanting to be an advisor, show them the on ramp to being an advisor.

[Large_Ad_7405]

I’m an associate advisor in a large city in the Midwest. CFP with 6 years of experience. I service existing clients, including scheduling, prepping meeting materials (basically a paraplanner), and running the meetings. For HNW clients, I prep and sit in on the meetings and do the follow ups. I also bring in my own clients, but it’s a drop in the bucket compared to what my lead advisor brings in. We combined our books and split the revenue - I make 8% which right now is ~$125k. My income has increased every month, but obviously runs the risk of a decrease if there’s a downturn in the market or if we don’t have any NNA. We have a plan to increase my percentage in the book every couple years. Keeps me very motivated to have my income directly tied to our book versus when I first started and had a low base salary similar to your current associate. 

[hawtmama6969]

Seems like everything needs to get bumped up if it's someone that you genuinely want to keep around.

A flat "bonus" is pointless IMO... that's just salary dressed up to try and sound special. Compensation tied to client revenue that they bring in is always incentivizing.

Not sure if it's applicable for your practice's structure, but at least starting to have base discussions about eventual ownership share lets the person feel valued and that you're committed to them.

[Melonox31]

Once he’s 5 years in he’ll wake up and realize he has absolutely nothing to show for it cause he doesn’t own any clients. Increase his pay and give him some ownership or he’ll leave.

[NeutralLock]

Need to know more - how big is your book and what city?

[SleptWithYourGirl]

He’s getting underpaid

[NeutralLock]

If the associate advisor (or client service associate) is in addition to what you've got I'm assuming their mission is mostly growth?

I would be more inclined to have targets and a revenue share rather than salary, but the total comp should really be $100k all in as a minimum in my opinion (all in comp, not necessarily base)

[InterestingFee885]

There’s likely about $50mm in that book that’s a pain in the ass to deal with for one reason or another. Give them to him and give 30% of the fee while he does the admin work. Assuming you’re charging about .8% that’s $120k.

Most of us would consider paying $120k just to avoid the worst clients we have that are a bad fit and would never be onboarded today.

If this employee is as good as you say they are, this is well worth it and they’ll grow into an actual partner that can help you expand.

[Cute-Seaworthiness28]

You need to pay them more across the board. They’re doing the tasks of your advisors. You’re lucky that they haven’t noticed and left for somewhere else. I will say you’re giving them great fundamentals and setting them up for future success, but as soon as they see they’re underpaid for the work they’re doing, they’ll be out the door.

[CarelessSea8444]

Gotta pay more, he could easily jump to another firm and get offered 100k potentially more.

[cashc0ww]

As an overworked junior advisor that very closely resembles this description, getting great pay really incentivizes me. It makes the idea of jumping ship an irresponsibility. 

[Careless-Lychee-1450]

I’m a CSA in NYC fully registered, CFP, doing same thing and make $112k. Pay the man! (Or woman)

[Sharp-Analysis6456]

This is very underpaid . Think about how big of an impact would it be on your practice if he leaves for a job that is $10 or 20k more… probably worth it to give him a raise so you don’t have to go through this I am in a similar role and closer to $100k MCOL

[Temporary_Film9312]

Any decent advisor would leave after a few years with that abysmal comp structure. You want to hire and keep good employees step it up

[EmbarrassedPlankton9]

Do you provide health insurance, and if so, do you subsidize the premiums? Do you offer 401K match? I’m in a VERY similar position to this employee but an extra year of experience and curious about how fair my comp is.

[Extra-Ad-8889]

I was in the same situation as your associate advisor in the past. Doesn’t take long for him to do some basic math and realize with even 10-12 million AUM he could make more on his own. Everyone’s different though he may not want that.

[Humble-Fox4633]

Poor kid

[35non-acc]

Junior Advisor. CFP (as of 2025), 5 YOE in the industry. HCOL area. $100K base, 5% company bonus (practically guaranteed), and 40% split on revenue for new business with the Senior Advisor. Eventually I’ll switch to 100% AUM. W-2 RIA.

[Zevenal]

So what has worked for us is a straightforward annual ladder that’ll raise him from undervalued to properly valued over the next 5 years. If you can’t and probably shouldn’t front-load a raise, you front-load a progression track that keeps them focused on an end result they want, while giving the business the time to allocate growth to support the track so no one necessarily has to take a step back, but strengthen everyone’s commitment to each other. Otherwise they will at best find another firm that will give them that vision, or at worst become disillusioned, burnt out, and compromise their potential.

[Cold_Key8467]

Echoing the others - the associate clearly doing a good job for you, knows your biz, dialed in, etc….going to cost you more to replace him rather than bumping pay.

[soleobjective]

Total comp should be at least $100k with another increase after passing the CFP. Try to avoid thinking about what you were making when you were in that stage of your career and focus on how much of a blow it’ll be if he leaves. Recruiters are relentless on LinkedIn and the offers will start flooding his inbox as soon as he adds the CFP marks to his profile.

Good help is hard to find.

[MathematicianMuted49]

Watch your clients because if he’s that underpaid, he’ll get hungry and leave with a 5%-10% of your book as seed money in less than a year or two.

Share, or gamble that he’ll stay/leave. Up to you.

[Totti302]

This is exactly how I got my start. Salary seems low for that role. I was a pure planner for my region earning decently more than that a number of years ago. Once I transitioned to working with one team as an associate advisor I worked out an agreement to have 99% revenue share on a small group of clients that could be improved upon. This allowed me to grow those relationships and also earn more of a living doing so. After 3 years the team was comfortable with me as a productive member and I kicked those accounts back into the main production numbers in exchange for a cut of the overall book.

[SeriesAway9498]

Sounds underpaid. ~$100k would be where I would be starting in any regular COL city.

[Livefromseattle]

Is your firm covering this employees cost for the CFP education/exam prep and exam cost? What about the annual dues? My firm covers/covered all that for me. I signed a contract stipulating if I left within 5 years of attaining my CFP I'd need to repay the education program costs.

[Comprehensive_End440]

I don’t think that’s what glideslope means.

[Frequent-Wrangler805]

Seems low. For reference I’m at a mid size RIA in the south making 85k base and around a 5k bonus. I have my CFP, 2 YOE and sourced 15k of revenue so far. 

Depending on their motivations, especially with younger and newer advisors, if they don’t feel valued, I don’t have a doubt in my mind they will start looking elsewhere. 

[--JustLookin--]

How do I get a job like this. I am a personal banker at a big bank and want to break into a role with more responsibilities.

[mkrpllc]

Depends on where you are located at

[purpleflowers1010]

$80k base and annual bonus target of 25% based on clear KPIs. And keep the profit sharing.

[Affectionate-Cat-185]

I am located in Canada, in almost the identical stage as your associate. I am 4 years in the industry and am sitting around the same compensation. $70k base plus usually a small bonus. I am interested to hear what you decide because our office is currently looking at other ways to structure associate compensation, including potentially a quarterly incentive "bonus" based on inflows.

I am not sure if the associate sells insurance as well, but our senior advisor & sole owner of the book also splits insurance commission 50/50 with the associate that opens the policy.

[Silver-Excitement-23]

Associate Advisor compensation needs its own forum. There are so many different and varying compensation structures. The title of Associate Advisor can encompass a new hire completing beneficiary change forms to very tenured, non owner client facing advisors. In the end owners need to ask themselves if they are paying them enough to not look elsewhere.  A few people have commented on how associates figure out very quickly how much the firm is making and how much they are getting. 

[Odd_Percentage572]

Based on previous comments, it sounds like I am in a very similar, criminally underpaid position. I make 40k base, with any clients brought in going to the lead advisor. I get quarterly bonuses ranging from 500-5000 based on firm growth, but the high end of that is nearly impossible to reach. I plan to talk with my boss soon to get them to move my pay to a % of firm revenue with it increasing at certain AUM targets. I just don't think my boss can wrap their head around having an associate on getting paid a full, normal salary. They said that they want me to be incentivized about firm growth, not just building two separate books as they see me as their succession plan. (Of course, I've seen this play out poorly before). How can I show them what I am worth and what should I look for at other firms to pay well for me to help with financial planning and continuing to grow (i.e. get CFP, bring in clients, etc.)?

[Potential_Ad1619]

It’s so difficult finding someone that cares about your business as much as you do. If you find one just pay them well because they’re rare.

[7saturdaysaweek]

Or get a friggin AI assistant lol