The salary of investment advisory services professionals can vary greatly depending on factors like experience, firm size, location, and compensation structure. Advisory firms typically pay advisers via a base salary plus commissions or fees based on assets under management (AUM). According to recent industry surveys, the median compensation for advisers with over 5 years experience ranges from around $100,000 to over $300,000 annually. However, top performers at large firms can earn seven figures in some cases. Understanding how advisory pay works along with the key drivers of earnings growth is helpful for both aspiring and current professionals in the field.
Base salary provides stability while fees/commissions allow scaling
Most advisory firms pay advisers via a base salary in the $50,000 to $150,000 range, especially for newer entrants. This provides a degree of stability. However, the real earning potential comes from asset-based fees or commissions. A 1% AUM fee on $100 million assets is $1 million in revenue for the firm. Top performers are often awarded 20-30% of revenues they generate, enabling seven-figure paydays. While salaries at large national firms tend to be at the high end, boutiques pay less but offer potential for much higher share of fees.
Experience level dramatically impacts average pay
According to the InvestmentNews 2022 adviser compensation report, those with 5-9 years experience earned median compensation of $135,000. With 10-19 years under their belt, pay rose to $212,000. For careers over 30 years, median pay reached $300,000. Achieving higher pay requires consistently expanding AUM through new and existing high net worth clients.
Working for larger firms means larger base but splitting fees
By their nature, large RIA firms like Morgan Stanley and Merrill Lynch can pay higher base salaries given economies of scale. However advisers only get to keep around 25-30% of generated fees. Smaller RIAs pay lower base but enable advisers to keep 50% of fees or more, allowing greater upside for rainmakers. Aspiring advisers need to assess tradeoff of base salary versus potential fee revenue.
Location significantly influences earnings potential
According to InvestmentNews data, median pay in the Northeast region was $215,000 compared to $157,000 in the Midwest and South. Advisers in metro areas like NYC, LA, and Chicago have access to more high net worth individuals and families, driving higher revenue potential. Working for boutiques on the coasts provides opportunity for larger shares of fees.
Many paths can lead to a lucrative advisory career
While MBA grads from top schools are heavily recruited by large RIAs, veterans and career-changers have achieved success after gaining key certifications like the CFA or CFP. Joining a firm as a paraplanner or analyst can provide training before progressing to client-facing roles. For established advisers at smaller firms, moving to a national RIA can boost base salary but reduce fee splits.
While client assets under management drive top earnings, gaining relevant experience at national and boutique RIAs along with professional certifications can position advisers for six-figure salaries within 5-10 years of entering the field.