Page 18 - Investment Advisor March 2022

RIA LESSONS & LEADERS

By Jeff Berman and Michael Fischer

Here’s How Much RIAs Pay Their

Employees: Schwab

Also, four big reasons for the surge in record-breaking RIA deals.

IA employee compensation
continues to rise amid a tight
Rlabor market, and RIA firms
are increasingly competing for talent
by offering more than traditional com-
pensation, according to the findings of
the latest RIA Compensation Report by
Charles Schwab.
Across the RIA sector, total cash
compensation has increased each year
since 2016 and was up 14.5% overall
from 2016-2020, according to the report,
which is an addendum to Schwab’s 2021
RIA Benchmarking Study that was
released in July.
Client service teams and specialized
roles have seen increased compensa-
tion during that same five-year period,
Schwab said.
As examples, the report noted the education and professional dues in 2020, “Firms with a greater commitment
median rise in cash compensation for based on data collected from January to to staff saw higher staff retention, help-
the following roles: March 2021 on almost 13,000 employees ing to ensure they deliver an excep-
• 20% to $238,000 for senior client across 27 roles typically found at RIAs, tional experience to clients,” according
account/relationship managers the report said. to the report.
• 15% to $107,000 for client Nearly 80% (78%) of the more than Of the firms with staff departures in
account/relationship managers 1,000 firms surveyed reported they 2020, 59% were firms with over $250
• 13% to $65,000 for client service planned to hire in 2021, according to million in managed assets, while 46%
associates Schwab. If the current growth rates were firms with greater commitment
• 7% to $177,000 for investment/ continue, the median firm will have to staff, Schwab said. The median staff
portfolio managers to hire six new roles over the next attrition/turnover rate in 2020 for firms
• 12% to $95,000 for research five years, not even accounting for with over $250 million in managed
analysts employee attrition and turnover, the assets was 5.8%, while the rate for firms
• 18% to $110,000 for operations report said. with greater commitment to staff was
director/managers The top recruitment channel in zero percent.
• 15% to $64,00 for operations 2020 was personal or professional RIA firms can pick from various
associates. networks, which accounted for 49% “levers to create attractive compensa-
Compensation costs accounted for of recruitment, ahead of RIAs (30%), tion packages” to attract and retain tal-
71% of an RIA firm’s expenses in 2020, colleges and universities (27%), non- ent, according to Schwab. Those levers
Schwab said. financial professional services firms include incentive pay and equity own-
The median firm with $250 million or (18%), banks or trusts (13%), wire- ership. Seventy-four percent of firms
more in assets under management spent houses (10%) and independent broker- polled use performance-based incen- Adobe Stock
over $1,700 per professional on training, dealers (9%). tive compensation to “help engage

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