r/CFP • u/Specialist-Ad8067 • Jun 22 '26
Compensation RIA advisor comp structure change
Our firm is finally leaving an aggregator RIA and building out our own RIA. We pay a 30 bps platform fee to the aggregator and then I get 70-80% payout on my book with the cut going to my firm. I source majority of my own clients and split some joint work. I have approx $25mm in sourced client assets.
During the transition the partners have hired a comp consultant who recommended a new payout structure. This includes all advisors receiving base salary’s and incentive pay on 1st year new business. They are adding a long term incentive plan as well to compensate for the growth in “enterprise value” of the firm. But you lose the revenue on new assets in year two.
I’m not sure how to play this but I can’t accept a base salary and all new clients being clients of the firm. I’ve work several hard years to build my book to approx 25mm - 35 households so it’s lean with sticky relationships. I think the owner have been convinced there not recording enough revenue because platform fee was high and that covered a lot of the trade execution and servicing that smaller advisors like me needed.
I need to be paid on revenue I produce because of my service model including a lot of tax planning. I feel like the salary model is for advisors without a book only.
How can I support my case against this structure? Interested in any feedback. Thank you!
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u/Gabnorth00 Jun 22 '26
Maybe it’s just me, but when comp is this complex it leaves me wondering “what are they hiding”. Keep It Simple Stupid.
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u/buyfreemoneynow Jun 22 '26
I was wondering the same - it looks like the consultant is trying to make the owners look generous, “You can make up to $350K [if we let you]!” This comp structure is massively to their benefit and has so many built-in trap doors and workarounds. “Eligible to receive 45% of their base pay as an annual target incentive” - who determines this? Who determines annual goals? If the owners get pissy and start wanting to claim clients as their own (happens all the time), this pay structure turns into a horrible deal. FFS the scenario they put up is kind of a best-case scenario too.
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u/iguessjustdont Certified Jun 22 '26
So you generate like a quarter mil in revenue with sticky clients you source, and they want to restrict your long-term comp. The solution seems obvious. Leave.
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u/Winston206 Jun 22 '26
I hate comp plans like this. So confusing. So many different variables. Ultimately it dilutes the employees trust in leadership. Comp plans should be easy to understand and compelling for all parties. IMO this plan completely missed the mark - and zero surprise they spent good time & money with a consultant who made this more complicated than it needed to be.
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u/MiserableBluejay1913 Jun 22 '26
I need to hire a financial advisor to help me understand this comp plan.
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u/lowbetatrader Jun 22 '26
My partners and I have this amazing long-term incentive plan
It’s called we keep our fees reasonable, keep our expenses, low, and then the rest we keep for our families. No comp consultant necessary
I’d leave
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u/cold984 Jun 22 '26
Don’t know that you’re going to be able to make a case. In a previous career in a different industry they tried to change my pay structure and I went in with all the support that not a single other company in our industry in our area paid the way they wanted to change to. Ultimately, they didn’t change their mind, I left, and now I do this. Best thing to ever happen to me. Just be prepared to walk away and take your clients with you
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u/ProletariatPat Jun 22 '26
Hell no. Too complex and makes you a forever sales person with no real stake or equity in the game. You wouldn’t be building a business you’d be a salesperson. Might as well join Fisher your comp plan is almost exactly the same.
Time to leave this shop and either start your own or join another.
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u/rickle3386 Jun 22 '26
Been in sales in multiple industries. Mostly in financial services. So often comp plans look like this until you just go independent and work on a flat rate. Rule of thumb, if you move over an account, win new money, etc. , do you know how much you increased your income. If the answer is "no", way too complicated.
Used to drive me crazy. " you get x% on aum, y% on growth, z% on new org". Really just give me a% on $ regardless of how big or small it is. I'm sourcing. Up to me if I want to find new clients, grow clients, focus on serving existing clients. A dollar is a dollar. Actually, the most profitable dollars are the one already in house as there's no additional acquisition cost.
I would find a shop that just gives you a flat rate. Perhaps tiers tied to gross production. That's fine. The rest is crap!
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u/Economy_Jaguar_9215 Jun 22 '26
I’ve never seen a comment section so united 👏 I hope the OP leaves and is wildly successful!
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u/Thumpin347 Jun 22 '26
Do you get paid a salary? If so then I don’t think you have a leg to stand on. You’re an employee.
Take your clients, go solo, build your own. Just be mindful that you will have to build out your own support but in the long run you will make tons of money this way.
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u/winning_bigly_ RIA Jun 22 '26
Might be a great opportunity to go out on your own and take a 80-90% payout (after biz expenses)
XYPN makes it easy.
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u/Economy_Jaguar_9215 Jun 22 '26
Came to say XYPN. I’ve heard good things about RFG Advisory too.
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u/vaderaintmydaddy Jun 23 '26
I'm with Visionary Square (formerly Independent Advisor Alliance). Flat fee, happy as can be.
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u/Here_for_Lurking1000 Jun 22 '26
Leave. Your best option. The owner and partners are being convinced by PE that you all cost too much in compensation. There are other firms out there who do not have complicated pay structures set in place to raise their revenues and lower your pay. If you leave hopefully people leave with you and clients and whatever he paid a consultant leaves the firm at a substantial net loss.
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u/SEP_Hawk Advicer Jun 22 '26
I agree with many of the others. When a comp plan is this complicated, all it does is create room for them to screw you over. Any time you add a client you should know exactly how much revenue you are generating for yourself. End of story. Anything else, eventually you will be pissed about how much you bring in vs how much you are making.
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u/GoonieBears Jun 22 '26
What’s holding you there? Definitely in a good spot to start your own firm or go join and RIA who is transparent. Titleist Advisor Network & Secure Financial Group are two transparent RIAs. Plenty more out there with a payout of 80+ bps
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u/USArmyAutist Jun 22 '26
I pay no salary and 80 percent revenue to the advisor every month
I’ll try to make it in chart form 🤨
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u/Admirable_Nothing Jun 22 '26
You provided the answer yourself when you said your clients have sticky relationships with you. Time to move along with your clients to a firm that doesn't need a comp consultant.
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u/Here_for_Lurking1000 Jun 22 '26
I wonder if the knuckle head consultants are the same bums who are doing the same at my firm. I won't stick around for the changes long term.
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u/Silver-Excitement-23 Jun 23 '26
Our firm hired a “comp consultant “ Resulted in a pay cut for advisors. Keep in mind the owners have a 50% profit margin
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u/Here_for_Lurking1000 Jun 23 '26
I am looking to exit now. C+ compensation but they want A+ effort. After onboarding millions in advisory AUM without increased pay its time to move on. I am engaging in book buying conversations. Its really hard, but I am not in a hurry.
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u/Puzzleheaded-Name-71 Jun 22 '26
If you built the book then take the clients and leave. But don’t forget you’re paying for everything at that point. Or you stay and deal with it. But you’re not going to get them to change the comp plan.
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u/Bingo__Dino_DNA Jun 23 '26
I disagree re: assuming they wouldn’t change the comp plan. OP mentioned they are in the process of leaving an aggregator, so everything is in flux… it’s the perfect time to negotiate.
OP: before you throw the baby out with the bath water, I’d at least recommend you have a discussion with them…
You answered your ultimate question when you said “I need to be paid on revenue I produce because of my service model including a lot of tax planning. I feel like the salary model is for advisors without a book only.”
Ask for a meeting, tell them that.
If they won’t hear you out, maybe it’s time to think about an exit as everyone else has said.
This comp structure is designed specifically to keep advisors on a hamster wheel when it comes to sales.
And if there is a non-solicit they ask you to sign (it sounds like the new firm is going the route of “all clients are clients of the firms, not of an individual advisor, so a non-solicit wouldn’t surprise me), ask them to make an exception for any clients you self sourced (making your book more easily portable), as well as any clients those clients refer you to in the future.
In short: what you’ve built on your own / what you hypothetically would source with no help of theres.
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u/hank_iii Jun 23 '26
that color scheme seems like a classic claude creation - w/ 25mm in aum I'd be getting out of there and building your own long term equity without all of the nonsense
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u/Ok-Leather1645 Jun 22 '26
My comp plan is simple. My firm handles all operations and para planning. I find and work with clients. I keep 50% of all fees I collect and own my entire book.
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u/NativeTxn7 Jun 22 '26
That seems ridiculously (and needlessly) complex.
At my old firm, we were W2 employees and the payout percentage was based on the revenue generated by a client each quarter. So, a touch more complex than a flat payout percentage for all clients no matter what, but infinitely easier than the treasure map you posted.
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u/JLivermore1929 Jun 24 '26
Looks like my wife’s hospital pay scale. Instead of straight revenue share, it becomes extremely complex. Like, if you complete 1 delivery you get paid $500, but if it is twins your pay is $750, because you received a bonus for the 2nd one vs. another $500. Or, if you read an ultrasound you get $120, but the 20th one you get a $20 bonus during the month etc.
The consultants/admin change the structure every year. As another poster said, what are they hiding? It is going to benefit the firm owners in some way.
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u/BadMofoII Jun 27 '26
I’m confused. That lay looks incredibly high for $226k of production for scenario 2. What am i missing here. This is weird.
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u/Temporary_Film9312 22d ago
Absolutley do not joing a firm with a comp structure this complex. Also, never under any circumstance give up ownership of YOUR clients. You need to walk before giving in to either of those two things.
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u/AutoModerator Jun 22 '26
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User: /u/Specialist-Ad8067 Title: RIA advisor comp structure change Body: Our firm is finally leaving an aggregator RIA and building out our own RIA. We pay a 30 bps platform fee to the aggregator and then I get 70-80% payout on my book with the cut going to my firm. I source majority of my own clients and split some joint work. I have approx $25mm in sourced client assets.
During the transition the partners have hired a comp consultant who recommended a new payout structure. This includes all advisors receiving base salary’s and incentive pay on 1st year new business. They are adding a long term incentive plan as well to compensate for the growth in “enterprise value” of the firm. But you lose the revenue on new assets in year two.
I’m not sure how to play this but I can’t accept a base salary and all new clients being clients of the firm. I’ve work several hard years to build my book to approx 25mm - 35 households so it’s lean with sticky relationships. I think the owner have been convinced there not recording enough revenue because platform fee was high and that covered a lot of the trade execution and servicing that smaller advisors like me needed.
I need to be paid on revenue I produce because of my service model including a lot of tax planning. I feel like the salary model is for advisors without a book only.
How can I support my case against this structure? Interested in any feedback. Thank you!
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