Schwab RIA Study: How Financial Advisors and Other Staff Are Paid

Compensation costs for registered investment advisories, or RIAs, made up 74% of firms’ expenses in 2019, according to the Schwab 2020 RIA Benchmarking Study, released Thursday.

The compensation data are based on responses from more than 760 firms and nearly 10,000 employees. The self-reported data mainly comes from RIAs with $250 million or more in assets under management, or AUM, and was collected between January and early April 2020.

Here’s more insight into the compensation results from the Schwab RIA study.

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How RIA Professionals and Staff Are Paid

Cash compensation for RIA employees rose in 2019, with the median total cash compensation increasing 4% from the previous year. Some key RIA compensation findings include pay figures for these roles:

Client account management, sales and marketing. Total cash compensation for these positions ranged from a median $64,000 to $204,000. The majority of these workers, which include client services directors and client account managers, received performance-based pay incentives.

Investment roles. For investment professionals, total cash compensation landed between a median $65,000 to $160,000. More than half of these professionals, which include portfolio managers, financial planners and traders, received performance-based pay.

Operations and administration. For workers in operations and administration roles, total cash comp ranged between $48,000 and $111,000 at the median. These folks include operations directors, human resources professionals and executive assistants. They were less likely to receive firm equity than those in the investment, client account management, sales and marketing roles.

[Read: Building the Next Generation of RIA Professionals.]

How RIAs Recruit Staff

When finding new staff, RIAs poached from other advisories. Nearly 40% of firms recruited talent from other RIA firms. Approximately one-third of respondents harvested talent from colleges and universities. Additionally, 16% found new staffers at a bank or trust.

When looking forward to 2020, 73% of RIAs planned to hire employees. And while 2020 was a strange year, with a global pandemic and resulting economic crisis, most employers went ahead with their hiring plans, says Lisa Salvi, vice president of business consulting and education at Charles Schwab.

Performance-Based Pay

In 2019, 77% of firms compensated staff with performance-based incentive pay, including bonuses and compensation related to accomplishing certain goals. Across the study, 28% of firms linked compensation to revenue generation.

Staff who hold equity in the firm, also called “working owners,” made up between 22% and 33% of responding firms’ staff, depending on the size of assets under management.

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