How Much Money Do Financial Advisors Make?
There are many different compensation structures for financial advisors. This is my take on those models and where I have seen the salary levels in each of these models.
The topic today is from a question that I have gotten several times over the past couple of months, which is how much money can you earn as a financial advisor. Talking about salary or income can be a bit taboo, so I’m going to just share a little bit about my own situation, but also speak to several levels of pay that I have seen amongst different advisors in the industry.
My goal for this video will be to give an honest look into compensation for financial advisors. The difficult thing is that there is such a wide range of compensation in this industry, that its hard for me to give you all a good idea of what your future compensation might look like. So I will give several examples of different advisors I have talked with and what I know about their pay.
First, its important to know the main compensation models in the financial advising industry. You have an all commission model, a performance-based model, and then a salary only model. The commission model is what I would consider the “old school” compensation model for financial advisors, but it is probably still the most popular in the industry. The way commission only works is that you are paid only from your personal book of business, which means fees and commissions generated from your clients’ accounts. Almost all financial advisors were paid this way back in the 70s and 80s, and still some firms like Morgan Stanley and Raymond James hire in young advisors to work under this model. There can be a couple problems with this. when you are starting off in your career, your pay will be very little or 0. and it can also create many conflicts of interest with your clients when you are paid just to trade their account or sell them products. Since you are paid only based on your client’s accounts, I have seen advisors in this model that make around $20,000 a year, and others than make literally over $1million every year. It is extremely dependent on your clients.
Next is what I’m calling a performance-based model, and this is how I am paid. This will look like half or most of your pay coming from a base salary, but then additionally compensation for things like growth of the investments for your clients or for the firm, brining in new clients to the firm, or other incentive-based metrics.
So when you talk about the base salary with this model, I think most advisors, once they have passed their regulatory licenses and start working with clients, make $30k-$50k in base compensation. Then for the inventive pay, I have seen anywhere from $5k per year to $20k per year for new advisors. Of course both of these parts of the equation will increase with time. And like I mentioned, this is the model I am paid through. I fell right in these ranges when starting off as an advisor. Future pay increases can come from base pay increases for good work performance, or from getting higher incentive pay or bonuses for hitting certain business metrics. Everyone’s situation can look different. So It is important to understand your own compensation package when considering any job.
Finally, you have the salary only model. This model is going to become more and more popular as more advisors sell their businesses as they retire, and larger firms have to hire younger advisors to service the clients. The salary only model is good because it prevents any conflicts of interests for advisors, but it also means your pay increases are totally dependent on your employer giving you raises. I know of a couple firms that pay their advisors with this model. They start at a base salary of about $60,000, and then have set raises that the advisors get every year as long as they are doing their job well. By your 30s and 40s, you can reasonably expect to be earning $200,000 per year. And realistically for a good advisor this number will be fairly consistent across the other compensation models by this point in your career.
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Great summary. This is how doctors are paid too in the US. I could graduate from medical school, and choose to be an employee for a hospital, and earn a W2 wage, or open my own practice, where it’s 100% commission. There are medical groups that offer bonuses for seeing more patients as well, more like your 2nd method. I think it should be added that the financial advisors who make the most money are almost always paid by compensation method 1, 100% commission, or in my case, 100% fee-based. 20 years ago when I first started as a financial planner, I was only making $20-$30,000 a year for the first few years. I’m now earning in the seven figures, run multiple offices, and employ several people. If you’re looking for long term success, I really believe that the 100% fee base method is the most secure, and gives the highest level of compensation. It just takes a few years to build that up. I worked two jobs in my early years to get me through that.
@ZRWooten
2 жыл бұрын
Hi Richard, I am a new financial advisor looking to learn on how to best go about building my career. I would love to get in contact with you and get your advice if you ever have any time available!
Very helpful your video. Thank you!
@straighttalks-ajsrmek323
Ай бұрын
Thanks for watching!
You the best person and honest reviewing person, love you❤ love from india
@amritanshankur8231
3 жыл бұрын
🇮🇳
Hi I am living in Boston and I always want to get into the Finance industry but it seems like most jobs require a lot of experience or top schools' degrees, which I cant have while I am working as an accountant and were a bad student. Do you have any advice? I am planning to take the CFA 3 next May 2021. I didn' t want to bring Covid 19 home so I decided to call it a pass on 2020 ' s Dec registration. P/S: wonderful channel,humble and honest host. I subscribed and I hope you get even more subscriptions overtime.
@straighttalks-ajsrmek323
3 жыл бұрын
If you pass level 3, you can definitely get into the industry even though you don't have a high GPA. You will just want to keep networking with companies you might want to work for. Thank you for subscribing!
You have no idea how much a private wealth advisor at a top firm can make my guy. Wayyyy underestimating
@straighttalks-ajsrmek323
Жыл бұрын
I work for one, and I do. But I didn't want to paint an overly optimistic picture.
Hey, I was just wondering, did you ever make a part two or go into more details about working as a financial advisor?
@straighttalks-ajsrmek323
3 жыл бұрын
I have not made a part 2 to this, no. What questions do you have?
@hhhhoooojdjd
2 жыл бұрын
@@straighttalks-ajsrmek323 I think you could go a little more into detail, for example working for a big firm that provides the leads but pays very little on comission and there is so much compliance and micromanagment comparing to smaller firms where you have to find your clients but you make much more money after so many years and less red tape.
Very informative video. Would you say that the average beginning salary for a financial advisor would be in the '50s if it wasn't commission based? Like you said the old school way? I'm considering studying for my SIE early next year and getting myself a financial advisor job the same year health feasible. With that being, thank you for your quality content
@straighttalks-ajsrmek323
Жыл бұрын
Yes i think 50s is realistic, but you usually have to spend some time in a staff role working on getting the licenses before going into the advisor role.
So I have pretty much a guaranteed job offer on the table from my old college roommate who recruits financial advisors for a large company. I am concerned that it would not be worth my time to start a new financial advisor career as I currently have a wife and multiple little children which would mean it's not phesible to work long hours or take a paycut as my responsibilities are very heavy. I also currently work-from-home and, though the recruiter told me much can be done from home... I am pretty sure it would greatly hinder my ability to gain leads and do a good job. Thoughts?
@straighttalks-ajsrmek323
2 жыл бұрын
Yea I wouldn't take a sales first advisor job like that.
Such a helpful video, just graduated and am working on SIE. I got a job at Vanguard as a CRA with plans to get my CFP and go into wealth management, do you know anything about their pay scales? As far as I’m aware it’s 100% salary
@straighttalks-ajsrmek323
2 жыл бұрын
Glad I could help! Vanguard is all salary, yes.
Sir, is there scope for cfa in Canada or usa
Thanks for your great tips. I'm a Lawyer in Nigeria with a PhD in Law and I'm also a Law lecturer. I'll like to take the CFA and try to get a job in the USA in IB for the financial benefits. Will you advice me to do this?
@straighttalks-ajsrmek323
3 жыл бұрын
Personally, I would not want to work in investment banking. But you would certainly make a lot of money if you can get in. My advice is to learn as much as you can about what working in IB entails before making your decision.
@aishamohammed8044
3 жыл бұрын
@@straighttalks-ajsrmek323 Thanks a lot for your quick response. Professors here get paid too little so I fear my efforts over the next decade will not be rewarded. Do you think I'll have a chance at a good job if I get the charter all the way from here or is it too much of a long shot?
@straighttalks-ajsrmek323
3 жыл бұрын
@@aishamohammed8044 If you have a PhD and a CFA you will have a great chance.
If you’re doing a salary only firm, how much can you expect as a yearly raise, and does that increase with things like the CFP too?
@straighttalks-ajsrmek323
Жыл бұрын
10% maybe. And yes it would.
Hey AJ, I noticed that you mentioned a few times of 'your own book of business.' Does this mean starting out calling your personal Rolodex to get things off the ground? Does a person's ability to perform in the job rely entirely on their book of business?
@straighttalks-ajsrmek323
Жыл бұрын
Hey Zach, In some cases yes, but in my case no. The office I work is actively buying out retiring financial advisors so I am working with the clients of people going out the door.
I'm in my mid-40s and considering a career change to be a Financial Advisor. I think the salary only model would be the best for me. I'm leaning toward getting a CFP and then applying for positions. Can I get a good work life balance in this career? I'm willing to give up a potential higher salary for a better balance. Will I be able to find firms that value that?
@straighttalks-ajsrmek323
2 жыл бұрын
Yea definitely. It will depend on the office, but many advisors work less than 40 hours.
@ActuallyBenji
2 жыл бұрын
You need to be sponsored by a firm before taking the S7 and CFP.
@skateordie3433
6 ай бұрын
I'm in the same boat. Have you made the switch?
I'm taking CFA level 1 in Dec and don't have any finance related experience yet. Any tips for getting into a finance role for someone in my position?
@straighttalks-ajsrmek323
3 жыл бұрын
Well passing level 1 is a great way to "qualify" yourself to apply for some finance related positions. Then I would say any personal learning or programs you can do to learn more about whatever industry you want to work in will help. Finally, make sure you network.
@sethsavoie6174
3 жыл бұрын
Hi my name is Seth Savoie, I’m from New Orleans Louisiana. Is there any way to contact you personally via email or zoom? I would really like to talk to you about personal questions about the route I should take. I’m in my senior year in my undergraduate finance degree. I have a few questions I would love your input on. Please get back to me when convenient for you.
@straighttalks-ajsrmek323
3 жыл бұрын
@@sethsavoie6174 email me at straighttalksbusiness@gmail.com
I know many teams of partners at my firm making over 1m a year. Performance based though.
I don’t hear much about Prudential in these comments. Would you say they rank better than Northwestern? Or is it a similar structure? Thanks!!
@straighttalks-ajsrmek323
8 ай бұрын
I don't know much about Prudential's sales model. My guess would be that it isn't much different.
If I wanted to become a financial advisor as a 23 year old fresh off college and 2 years of internships, based off the performance based model I would get around 65k in salary, 30-50k in commissions, and 5k-25k if I was a good financial advisor?
@straighttalks-ajsrmek323
2 жыл бұрын
$50k base salary I think.
What do you know about northwestern mutual as a financial advisor?
@straighttalks-ajsrmek323
2 жыл бұрын
Its a terrible job. Just life insurance sales to your friends and family.
Hello! I’m a 19 year community college student who will be transferring to a four year university to complete my bachelors degree in finance. Investing is one of my biggest passions in life and I wanted to know what advice you would have for me as a 19 year old who aspires to go into the realm of finance, whether it be working up to a chief equity strategist position or a financial advisor. Thank you for your time.
@straighttalks-ajsrmek323
3 жыл бұрын
Sure thing. For right now, get the best grades you can. a high GPA will give you many more opportunities later on!
@geoffreyragbeer3084
3 жыл бұрын
i’m thinking of doin a 2 year diploma in finance, do u think the bachelors is needed?
@calisurfin
11 ай бұрын
@@geoffreyragbeer3084no degree is necessarily needed. But degree credentials do help as colleges offer employment opportunities.
Who would you recommend who I should work for as a new FA? NW Mutual or EJ?
@KayyDarnell
3 жыл бұрын
Wondering the same
@straighttalks-ajsrmek323
3 жыл бұрын
Probably neither, I would recommend you do a lot of networking at independent offices. But EJ if you had to choose.
@zakarygrue6085
3 жыл бұрын
I HIGHLY advise you look at what the company mainly does, and if that aligns with what you want to focus on. Also the pay structure
I wanted to get into IB for a long time, but after learning how bad their work life balance is, I decided its not a good fit for me. Im looking to make the move to Miami after undergrad- currently an international business student. any tips on what I should do ?
@straighttalks-ajsrmek323
Жыл бұрын
Asset management (buy side) is the best!
What are your thoughts on Raymond James?
@straighttalks-ajsrmek323
10 ай бұрын
Not positive but I can't say I have the most informed opinion.
Hey AJ. Thank you for the video and insight. I currently do books for a couple independent financial advisors and was wondering if each advisor does their own books in a financial advisor firm or if it is all run through the firms office. Appreciate your assistance.
@straighttalks-ajsrmek323
Жыл бұрын
Depends on the office, but I think it is moving in the direction of running all through the office.
@seanmoran3470
Жыл бұрын
@@straighttalks-ajsrmek323 Another thing to consider is selling your book when you retire. Edward Jones, for example does not allow you to sell. My firm Ameriprise does.
What Firms operate on a performance based compensation?
@straighttalks-ajsrmek323
3 жыл бұрын
Most of them.
@matthewbishop5176
3 жыл бұрын
@@straighttalks-ajsrmek323 What firm do you work for
I got in with NWM , it definitely faster paced in the sales world but higher reward. Just survive lmao
Straight commission is scary but I wouldnt do it any other way. My friends in salaried jobs will never catch up to my income.
@straighttalks-ajsrmek323
11 ай бұрын
Only works well for top performers.
Just passed series 7. Is series 66 much harder ? Thank you. Great vid.
@straighttalks-ajsrmek323
Жыл бұрын
The 66 is easier than the 7, but one or two sections are more technical so don't underestimate it.
@matt75hooper
Жыл бұрын
@@straighttalks-ajsrmek323 Thank you. I won't underestimate it. Like #7 I'm sure 66 is a beast too.
Hi AJ, I am Juhi, I moved here from India, In India i have completed my MBA and have experience of 5 years in Mutual Fund Industry both in client servicing and sales department. Now I am here. and want to continue my career but I am not sure where should I start, I applied to several banks like Truist, BOA and investment firms like Fidelity but not getting any success in getting to interview stage. I saw some video on KZread Regarding passing Series 7 Exam and SIE exam but they says you have to be Sponsor by some firm only that you can give those exams. Please guide where can I start my career and how?
@straighttalks-ajsrmek323
2 жыл бұрын
If you want to work in investments, it might help to get the SIE first, then apply to the jobs you want. You don't need to be sponsored to get the SIE!
@garbabeats
2 жыл бұрын
@@straighttalks-ajsrmek323 Thank you AJ. Appreciate your help
Does anyone have a list of Advisory firms that are Salary-only? Or know how to identify them in a job search?
@cjwalker247
2 жыл бұрын
you don't want to work there. The role of a financial advisor is about the risk we take. We are business owners, building our own practices. The salary based advisor jobs are not financial advisors. They are order takers. Think -- advisor at a bank. There are no real good ones.
Hey… I’m currently in college right now. I want to be a financial advisor. it’s why right now I’m trying to kick start my career by finding a company that will hire me so I can get my foot in the door. I recently got recruited into primerica. They sell life insurance and do investments. Do your think this is a good place to start with this Company. Also they are only commission based pay.
@straighttalks-ajsrmek323
Жыл бұрын
Hey Bruce, No I don't think that is a good way to start. You should get an internship or a client service job at an RIA or independent office.
i like your glasses man
@straighttalks-ajsrmek323
3 жыл бұрын
Thanks!
@trunksgaming44
3 жыл бұрын
I said the same thing
What's the highest commission percentage you've seen for selling insurance/investment products?
@straighttalks-ajsrmek323
Жыл бұрын
I have seen people get 7% on selling annuities, but I have heard of people getting as high as 11% for some insurance products.
@kingsolarenergy
Жыл бұрын
That’s it? For commission only?
Base salary of 60, 000$....not bad!
@christiananderson641
3 жыл бұрын
That’s horrible
@gradyedwards7835
3 жыл бұрын
@@christiananderson641 it depends where you’re at in life man and what you value. 👐👐
@Delimon007
2 жыл бұрын
Depends, you can easily make a base of 50-100k after your first year of working, after 5 years 60k is shit if you are a good advisor.
@Mossssssssssssssy
2 жыл бұрын
I can make more than that being a server wtf
Hello! I would like to make you many questions; could I get your email for more advices? I really enjoyed your videos
@straighttalks-ajsrmek323
3 жыл бұрын
Sure thing. StraightTalksBusiness@gmail.com
What do u think a person have CPA+CFA(both fresher)degree help in get new high?and which area will be best in Finance domain..pls.reply
@straighttalks-ajsrmek323
3 жыл бұрын
Yes, both of those designations are great. You will be able to work in almost any sector in the finance industry with that educational background.
Hey do you think you can send me your email address. I’d like to understand a “grid” for financial advisement pay. I’ll send it to you because I have a question about it. Thanks in advance!
@straighttalks-ajsrmek323
3 жыл бұрын
straighttalksbusiness@gmail.com
Hello Aj, I'd like to pick your brain pertaining to this topic , If you don't mind getting back with me, I'd greatly appreciate it
@straighttalks-ajsrmek323
2 жыл бұрын
Go ahead! What's up?
@DamianGerry
2 жыл бұрын
@@straighttalks-ajsrmek323 if you’ve got your sie, 66, 65 & get sponsored for 7, let’s stash you work with Charles schwab, how much would one expect to make salary wise, before commission, etc.?
@straighttalks-ajsrmek323
2 жыл бұрын
@@DamianGerry If you worked for Schwab as a service rep? My guess would be $40k.
@DamianGerry
2 жыл бұрын
@@straighttalks-ajsrmek323 not as service rep, but on the investment advisory side.. they you may be aware of at least
@hhhhoooojdjd
2 жыл бұрын
@@DamianGerry I know merrill pays 55K for fsa and 65K for FA but its a horrible place.
Lol 200k isn't even close for most financial advisor lol
dont you have to get approval from your firm to post these videos?
@straighttalks-ajsrmek323
3 жыл бұрын
It depends on the video.
@epoch707
3 жыл бұрын
you probably need approval for every video
Who the hell is this guy. He doesn't seem like he is a professional in the field to listen to his advice. I don't think this guy knows what a series 7 is. This the problem with people who are not qualified get on KZread and say random blah, blah blah😂