How Much Independent Financial Advisors Make

Going independent and starting an RIA has certain advantages for advisors who want greater flexibility in creating a client experience. If you’re transitioning from a larger firm into your own business, it’s important to consider how that might impact your earning potential. Comparing independent financial advisor salary numbers can offer some perspective on what you can expect.

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Average Independent Financial Advisor Salary

How much does an independent financial advisor make? The answer varies. We pulled independent advisor salaries from several career websites to demonstrate the typical earnings range. Note that all figures are accurate as of May 2024.

According to ZipRecruiter, the average independent advisor earns $49 an hour, or $102,134 annually.
Glassdoor estimates that the average independent advisory earns $101,600 annually in base pay, with total average earnings of $187,329.
At the lower end of the scale, Salary.com puts the average annual base pay for an independent advisor at $51,082.

These averages are based on all experience levels and years in business. They don’t consider whether a firm is newer or older, its size, the types of clients it caters to, or its geographic location. All of these factors can influence your earnings as an independent advisor. As a general rule, you can expect earnings to be less in the initial stages and grow as you scale your business.

The Bureau of Labor Statistics (BLS) estimates the average financial advisor earns $47.88 an hour, or $99,580 annually. This figure applies to all financial advisors, however, and doesn’t distinguish between independent advisors and those employed by advisory firms.

Independent Financial Advisor Salary vs. Advisor Salaries at Big Firms

Working at a big firm can have some benefits, including higher earning potential, particularly if you’re employed by a firm that works exclusively with high-net-worth clients. RIA firms typically have payout grids that determine how much you make based on how much revenue you generate or produce.

The more revenue you generate, the more you should earn, but payout grids are not created equally. Overall, the average RIA salary is $151,203, according to ZipRecruiter. Here are some salary figures from big RIA firms for further comparison.

UBS advisors earn an average of $102,134 annually. (ZipRecruiter)
BlackRock advisors earn $91,000 to $159,000 annually. (Glassdoor)
Merrill Lynch advisors earn $135,000 to $245,000 annually. (Glassdoor)

Could you earn more working with a big firm? Possibly, but your earning potential may be capped. Going independent means your earning potential is virtually unlimited. Along with that, you’re in charge of all the decision-making, which means you can mold a firm that aligns with your vision.

How Do Independent Financial Advisors Get Paid?

An independent RIA researching independent financial advisor salary.

One of the advantages of going independent is that you get to decide how to structure your pay. RIA compensation models typically include one or all of the following: base pay, bonuses and equity.

The most common independent RIA fee structure is based on assets under management (AUM). You might vary the fees you charge based on the client’s total AUM or the asset classes included in their portfolios.

Independent advisors may also charge flat fees or hourly fees for their services and earn performance-based incentives. RIAs must include an explanation of the fees they charge on their Form ADV. The Securities and Exchange Commission (SEC) requires this to meet compliance guidelines.

One thing to remember is that while you get 100% of the gross as an independent RIA, you’re responsible for covering expenses. How efficiently you manage overhead costs can determine how much of your earnings you get to keep.

How Can an Independent Advisor Increase Earnings?

Growing your income may be one of your primary goals in choosing an independent RIA model. There are several ways independent advisors can increase revenues as they build their business.

Choose a niche. Niching down may seem counterintuitive to increasing earnings, but there’s logic behind it. Targeting a smaller subset of clients means you’re competing with fewer firms for their attention, and you can tailor your services to their specific needs.
Diversify your offerings. Taking a holistic approach to financial planning may help you attract more clients to your business or retain the ones you have. Clients might come to you looking for help with one thing and develop different needs as they move through their financial life cycle. Meeting those needs can reduce the possibility of them looking elsewhere for advice.
Invest in client experience. Delivering top-tier service to your clients goes beyond the advice you offer; it’s also dependent on the overall experience a client has with you. Creating a smooth onboarding experience, utilizing software and other tech tools to automate services, and asking clients for feedback can help you provide the best experience possible.
Ask for referrals. Referrals are invaluable for growing a new RIA as an independent advisor. When clients trust you and have confidence in your abilities, they’re more likely to tell their friends, family members and colleagues about you. Creating an incentive program for referrals and hosting client appreciation events are two ways to garner more referrals from loyal clients.
Leverage SEO. SEO or search engine optimization refers to strategies designed to help you gain visibility in online searches. Investors increasingly use online search engines to find advisors to work with. Implementing SEO tactics on your advisor website and leveraging local search with a Google Business Profile can make it easier for your target audience to find you online.
Outsource marketing. Promoting a new RIA can be time-consuming, and it can take time to determine which marketing efforts are most effective. If you’re looking for a simpler solution, consider partnering with an advisor marketing platform that will help you generate leads and give you the tools you need to nurture new client relationships.

Frequently Asked Questions

What Does It Mean to Be an Independent Financial Advisor?

Being an independent advisor means you run your business yourself – you’re not affiliated with or employed by an RIA firm. Independent advisors have full control over how they operate their businesses, including the types of clients they work with, the services they offer and the fees they charge.

What Is an RIA Aggregator?

An RIA aggregator is a company that buys existing RIA firms to operate them for profit and/or works with independent advisors to provide them with the tools they need to grow. An advisor who wishes to leave their current employer behind, but isn’t ready to go fully independent, might partner with an RIA aggregator to serve their clients without having to assume all of the responsibilities of running a business.

What Are the Benefits of Becoming an Independent Financial Advisor?

Choosing to start an RIA firm and operate independently puts advisors in control of their careers. They can choose which clients to serve and the range of services to offer. They can decide how to market their business to meet their goals for growth, what fees to charge, and who they want to hire. Working for a big firm lacks that degree of flexibility.

Bottom Line

Understanding independent financial advisor salary ranges can help you set realistic expectations for launching an RIA firm. The more prepared you are mentally and financially to go independent, the easier the transition can be.

Tips for Growing Your Advisory Business

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Along with how much you could earn as an independent advisor, it’s also important to consider the initial cost. RIA startup costs can vary greatly based on your overall business plan. Creating a detailed startup budget can help you anticipate what it will cost to get your RIA up and running, and maintain it until you begin generating a profit.