Pay levels across a variety of industry positions have increased steadily in recent years according to The 2015 FA Insight Study of Advisory Firms: People and Pay. 

The recently released study finds that for the great majority of industry positions compensation growth exceeded average U.S. pay growth over the 2009-2015 period.  A more rapid rise in advisory firm revenue relative to compensation levels, however, has helped to increase profits and counter any squeeze on margins due to rising labor costs

The following slides show trends in annual cash compensation for four common advisory firm positions over the past six years. Two of these are key advisory positions---lead advisor and associate advisor.  Two are increasingly important non-advisory positions—chief operating officer and office manager.

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Lead Advisor

Not surprisingly, the lead, or senior advisor is the most prevalent position across advisory firms. Typically lead advisors are actively involved in generating new client relationships and converting prospective clients into clients. The lead advisor also manages ongoing client relationships, particularly more complex ongoing relationships.

Over the 2009-2015 period lead advisor compensation increased at a compound annual growth rate of 2.6%. Compensation growth was higher than the increase of average pay for all U.S. workers but typical relative to other advisory firm positions. In 2015, only the CEO and Chief Investment Officer positions had a higher level of median compensation.

Associate Advisor

Nearly two-thirds of all participating firms in the FA Insight study employed an associate advisor. The position is primarily responsible for the ongoing management and retention of existing client relationships. The role may work in conjunction with the lead advisor or other technical specialists in delivering advice.

Associate advisor compensation grew at a compound annual growth rate of 2.0% during the 2009-2015 period, slightly above the U.S. average. Excepting a large jump in median pay for 2011, compensation growth for the position has been consistent but moderate.

Chief Operating Officer

The chief operating officer (COO) position becomes fairly commonplace once an advisory firm approaches $2.0 million in annual revenue. This senior position is responsible for firm-wide operations, developing operating procedures, enhancing efficiency and managing firm resources effectively.

As the typical advisory firm continues to increase in size, demand and compensation for COO’s has increased accordingly. COO compensation grew more rapidly over the last six years than for any other industry position. Median COO compensation increased at an annual rate of nearly 7% during the 2009–2015 period, more than double compensation growth for lead advisors.

Office Manager

Often a firm’s first transitory step toward dedicated management is the office manager. This is a broad administrative position that typically manages activities such as procurement and distribution of office supplies, office maintenance, and accounts payable/receivable. As firms grow larger this position may evolve into a position with greater management responsibility, such as an operations manager.

Positions such as office manager are growing in value as appreciation grows for the role that non-advisory roles can play in boosting the productivity of advisors and the firm. Few positions have experienced stronger compensation growth than the office manager. Over the 2009-2015 period compensation has increased at a compound annual growth rate of 3.9%, with particularly strong growth in the last four years.

For more comprehensive information, the complete People and Pay study is available for order. The 2015 FA Insight Study of Advisory Firms: People and Pay analyzes data from more than 350 firms, offering detailed insight into the best practices related to organizing, motivating, developing and retaining people. Financial Planning readers can purchase a specially priced copy at Click on Order and enter the discount code FPREADER to receive a 30% discount off the $250 price of the study.