One of the questions we field on a regular basis is “how much I should pay my new hire?” We have written previously about some pitfalls associated with firms relying solely on industry salary surveys to determine competitive compensation for their team members. Below we have provided compensation information on some of our recent placements to provide additional data points for you to consider when making offers to new hires and/or revisiting compensation with your current team.

The types of firms we represent around the country are very similar in nature. Here is an overview of their characteristics.

• Financial Planning focused
• Boutique in nature
• Serve one or several niche-type clients
• Team friendly culture
• Career path
• Net Profit margin >15%
• Firm sizes range from 30 million AUM – 5 Billion AUM

The positions that we are recruiting for, in terms of roles and responsibilities, are fairly consistent among this group. Here are the commonalities:

• Lead Planner/1^st chair, Associate Planner/2^nd chair, and Client Services Planner/3^rd chair
• Hired as W2 employees of existing RIA
• <10 years of work experience
• We have seen Client Services Planners within a salary range of $40k – 65k, with new college graduates on the lower end of the scale and those with a few years of experience up to the low to mid $60’s.
  • The allocation of responsibilities can be something similar to:
    • 50% administrative/client service/operations
    • 50% advisory functions
  • Associate Planners usually fall within a salary range of between $45-90k, $45k for a new college grad type and up to $90k+ for a CFP Certificant with < 5 years’ experience. Not required to develop business (at least not in the initial years)
    • The allocation of responsibilities can be something similar to:
      • 20% administrative/client service/operations
      • 80% advisory functions
    • Lead Planners usually fall within the $85k – 125k+ range. Sometimes there are business development requirements.
      • The allocation of responsibilities can be something similar to:
        • 5% management of team members
        • 5% business development activities
        • 90% advisory functions

Here are some examples of firms that made competitive offers which candidates accepted. Keep in mind, this is cash compensation data only, and it is assuming a retirement plan such as a 401k with a match and health insurance coverage where the employer pays for 50% or more of the premiums.

 

East Coast

South Carolina – $200 - 250 million AUM firm offered recent college graduate from CFP Board registered program $52k plus 10% bonus potential.

Washington DC area – $300 - 400 million AUM firm offered career changer with 1 year of experience $65k plus 1% of firm revenue.

New Jersey - $1 billion + AUM firm offered career changer with no experience $60k plus 10% bonus potential.

 

West Coast

Northern California (remote position) – $100 - 200 million AUM firm offered career changer with 1 year of experience $60k and opportunities for discretionary bonuses.

Northern California - $1 billion + AUM firm offered MBA, CFP, CFA with 4 years of experience $105k plus 10% bonus potential.

Southern California – $100 – 150 million AUM firm offered a CFP with 5 years of experience $92k plus 20% bonus potential.

 

Fly Over

Minnesota - $1 billion + AUM firm offered CFP with 5 years of experience $80k plus 10% bonus potential.

Michigan – $500 - 1B AUM firm offered recent college graduate from CFP Board registered program $55k plus $2,500 signing bonus, $2,500 bonus for passing CFP exam, $2,500 salary increase for passing exam, and $2,500 salary increase when granted CFP® designation.

Missouri – $150 – 200 million AUM firm offered a recent college graduate from a CFP Board registered program $50k plus 10% bonus potential.

Colorado – $100 -150 million AUM firm offered recent college graduate from CFP Board registered program $48k plus bonus potential and $1k relocation bonus.

In most markets throughout the country firms can expect to pay $48-65k for a new college graduate from a CFP board registered program, $60-75k for someone with a few years of experience, and $75k + for a CFP®.  Competitive markets like New York, Washington DC, San Francisco, and Chicago can experience significant spikes in what it takes to secure a hire, due to high cost of living, internal competition from other planning firms, and external completion from industries that pull from the same talent base.  Even if your firm is not in one of these areas, it is prudent to consider what other professions (fintech, accounting, mortgage, etc.) are offering in your area.

Realize that once your firm develops a reputation for coming in low on compensation, which could happen only after one instance, it is difficult to recover – new hires, and students in particular, do talk to each other – so please use caution when “trying to get the candidate for as low as possible” by making low-ball offers that you hope might stick.

To give your firm, the best shot at landing your ideal candidate, start with an average or slightly above average base compensation, and build in several incentive pieces to encourage them in the direction of what you need done the most! The candidates that we tend to work with aren’t necessarily interested in the highest guaranteed cash compensation offer, but the best opportunity for growth so structuring your offer to include various step ups so they can see where they will likely be if they deliver, is a key component to securing talent in a very job seeker friendly job market.  We have seen prices for solid financial planning talent increase so if you are planning to make your next hire know that it will likely cost you more the longer you wait.