The Talent Market Has Matured – So Have Compensation Philosophies

HIGHLIGHTS FROM THE 2025 INVESTMENTNEWS BENCHMARKING STUDY

Trends in Advisor & Owner Compensation 

This is the fourth in a four-part series of articles that explores key aspects of the 2025 InvestmentNews Benchmarking Study of advisory firms. Previously, we looked at Trends in Financial Performance. Now, we’re taking a closer look at advisor and owner compensation trends.

Despite the positive revenue and profitability figures, the study also highlights growing concerns about client attrition, overhead expenses, and the long-term capacity of advisory teams. Key data points include:

• The median revenue per professional climbed to $1,064,071 in 2024
• So too did the median revenue per staff, which rose to $857,172 in 2024
• Median revenue per client, however, decreased slightly to $10,030

Increasing revenue per client, however, requires a fine balancing act – aiming to introduce new relationship services without conflicting with your fiduciary duty. Usually, this is easier with larger relationships where greater wealth brings a wider range of needs. But firms can also achieve this by diversifying their mix of client types, allowing planning needs to evolve over time.

Cutting costs and increasing workloads are not sustainable strategies for long-term productivity growth. Instead, focus on developing clearer incentive structures and career paths that help individuals grow alongside the business. Prioritizing margins over team culture and personal fulfillment is a surefire way to increase turnover.

The rise of specialization

As the study notes, more advisory firms are restructuring their hiring and pay practices to align with modern growth demands and emphasize specialized skill sets. They are professionalizing by hiring marketing specialists and business development officers instead of just expanding randomly.

• Nearly 1 in 4 firms (22%) hired professional business development specialists in 2024 – roles that have been notably missing in recent studies.
• According to our own ClientWise research, top-performing firms now allocate approximately 5 to 7 percent of their revenues to marketing efforts. 
• And the most successful are focusing more on content marketing, digital marketing, improving their web presence, making their website more SEO/AEO (Answer Engine Optimization) friendly, and building stronger brands.

According to Michael Kitces, “the money that used to get spent to incentivize advisors is now getting spent on marketing departments, which firms can do because they're large enough and have enough economies of scale.” The next generation of rainmakers are not solo advisors pounding the pavement; they’re the marketing managers who are laser-focused on building a sustainable pipeline. Not surprisingly, technology managers were also heavily recruited in 2024 (hired by 23% of firms) to improve operational efficiency and adapt to a rapidly digitizing marketplace.

The war for talent continues

Since 2018, base salaries for support and service advisors have steadily climbed (up 32% and 23% respectively). Last year alone:

• Support advisor base salaries soared from $66K to $80K
• Client service associates also saw their total compensation rise from $63K to $71K

Due to these rising costs, most firms adopt a reactionary approach to hiring instead of building capacity beforehand. By the time they’re prepared to hire, they often lack the resources to properly and efficiently train new employees, which can lead to losing talented professionals in this stressful, last-minute process. As Kitces highlights, the talent challenge becomes even more significant when considering that new advisor hires may need up to five years of experience to advise clients independently effectively.

As I mentioned in my analysis for the study, the top teams are actively growing their staff. As they increase their team size, they will need more full-time professionals to shape the firm’s culture and lead team meetings, performance reviews, and professional development.

Yet despite the talent shortage, more top-tier firms are now requiring CFP credentials – even for entry-level advisory roles.

Shifting incentives

Higher levels in the firm, such as partner and lead advisor base pay, have been mostly flat or declining. However, since 2018, incentive compensation has increased by 223% for partners. It’s clear that total compensation packages are shifting toward incentives that better align with broader firm performance goals.

• Total compensation, including incentives, for CEOs increased by 12%, rising from $357,000 in 2018 to $403,000 in 2024.
• The median incentive bonus more than doubled during the same period, rising from $57,000 to $123,000, while the base salary declined from $300K to $280K.

This shift toward linking compensation with overall business success rather than individual goals is also evident in the 38% rise in COO total pay – reflecting the increasing operational expertise needed to manage billion-dollar companies. As one COO said, “We’re finally being paid like we run businesses, not just back offices.” 

We’re also seeing a trend where practicing partners at the largest firms ($1+ billion in AUM) have fewer median years of experience (20.0 years vs. 25.5 years) compared to their peers at smaller firms with $500M to $1B. This is because larger firms recognize the need to build next-generation leadership teams to succeed in succession. They have gradually realized that advisors don’t necessarily have to be rainmakers focused on acquiring new clients to be successful. Instead, they can be just as valuable by focusing on wallet share expansion.

This has led these firms to hire younger partners (median 17–20 years of experience) as part of their succession plans – showing that these businesses are focusing on scalable growth and long-term strategies.

Coaching Questions:

1. How effectively does your compensation philosophy mirror the behaviors and culture you aim to grow?
2. Given the shift toward specialized roles like marketing and technology managers and the rising costs of support staff, how is your firm currently assessing and adjusting your compensation and hiring strategies to ensure long-term capacity and a sustainable team culture?
3. What specific firm performance metrics are you currently using or considering to better align incentive compensation for your lead advisors and partners? How do those metrics influence their daily focus and priorities?

About ClientWise LLC
ClientWise is a leading business and executive coaching firm serving financial professionals. We help advisors, managers, and executives grow revenue, build high-performing teams, and achieve measurable business results. Our certified coaches, members of the International Coach Federation (ICF), provide customized, action-oriented solutions tailored to each client’s goals and challenges.

With deep expertise in the financial industry, ClientWise empowers firms to enhance performance, improve client engagement, and develop next-generation leadership. Our mission is simple: help financial professionals get clear, get focused, and get results.

Questions Financial Advisors Often Ask

What compensation trends should financial advisors watch in 2026?

Incentive-based pay is rising sharply while base salaries stay flat. Firms are aligning compensation with overall performance, not individual production.

Why are advisory firms hiring more marketing and business development specialists?

Specialists help scale growth efficiently. Top firms invest 5–7% of revenue in marketing and rely less on advisors for rainmaking.

How can RIAs address rising talent costs and turnover?

Build capacity early, invest in training, clarify career paths, and strengthen firm culture. Last-minute hiring leads to higher turnover.

How can financial advisors increase revenue per client?

Offer deeper planning services, target higher-complexity clients, and diversify client types—while maintaining fiduciary standards.

Why are younger partners becoming more common in large RIA firms?

Large firms are building next-gen leadership teams and value partners who drive wallet share expansion, not just new client acquisition.

When should an advisory firm hire a business coach?

When growth stalls, turnover rises, leadership gaps appear, or the firm needs structure, accountability, and strategic alignment to scale.