Planners at IBDs, Wirehouses Earn Highest Salaries Among Advisors

It’s payday.

And even for financial advisors, where you work plays a significant role in determining how much you take home.

Advisors at independent broker-dealers and wirehouses were the industry’s highest earners last year, with median compensation (salary, bonuses, profit sharing) of $226,000 and about $214,000, respectively, according to the CFP Board’s latest compensation study. Advisors at big banks and hybrid RIAs fell in the middle, earning median compensation of $206,000 and $181,500. Advisors working at RIAs reported the lowest median compensation at $175,000. Not too shabby.

“While not necessarily surprising, the results reinforce that a financial planning career, and particularly being a CFP professional, is a rewarding career,” said Dr. Kevin Roth, managing director of research at CFP Board.

Making a Change

Compensation, however, isn’t the only factor advisors consider when choosing a channel.

The industry has experienced a steady wave of breakaway advisors leaving wirehouses and other large firms to launch or join RIAs. Chris Diodato, founder of WELLth Financial Planning, began his career as a dually registered advisor before dropping his Series 7 license and launching a fee-only RIA. Even though going independent meant potentially earning less, Diodato said the tradeoff has been worthwhile. “Being a strict RIA comes with operational perks, especially when it comes to compliance,” he told Advisor Upside. “Sure, I could make more money if I was dually registered, but I’d also have to spend significantly more on compliance or give up a portion of my revenue to a corporate RIA platform like Cetera or Raymond James.”

The Perks of Being a CFP. The report indicates the CFP designation, one of the industry’s most recognized credentials, comes with benefits beyond higher pay:

• Nearly 40% of CFPs engaged in profit sharing at their firms last year. 
• About a quarter received elder and child care benefits.
• Some 60% have access to employee wellness programs.

The designation also correlates with job satisfaction, according to the Board. About 85% of CFP professionals described their careers as rewarding, citing stability, work-life balance and opportunities for advancement. Meanwhile, nine in 10 said they expect to remain with their current firm for at least the next two years.

Diodato, for his part, said the title “financial planner” should be reserved for professionals who have earned CFP certification, not, for instance, strictly insurance salespeople or those who just passed the Series 65 exam. “It dilutes the CFP mark when everyone is a financial planner,” he said.