Salaries for Financial Planners, Investment Advisors and Stock Brokers

Of course, the straightest path into the financial planning profession is to earn a bachelor’s degree in a relevant field, then, for many, going on to earn the esteemed CFP (Certified Financial Planner) credential.

But the financial planning industry is also made up of professionals from other backgrounds, including licensed investment advisers, CPAs, insurance producers, and even dually-licensed advisors who are also able to sell stocks, bonds and other securities.

To some degree or another, all of these licensed professionals are able to provide some advising services, even if only within a particular niche like tax planning, life insurance and annuities, or stocks and bonds. But many in these fields build on those vital areas of specialty with broader knowledge of overall personal portfolio planning, sometimes even adding to their credentials by earning the CFP certification. Anybody can appreciate that an investment advisor or tax accountant who also holds a CFP would be a powerful alley in building a financial plan.

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Financial planning itself is broad and can encompass every aspect of strategic wealth building, from real estate to tax planning to investment and insurance advise to healthcare and college planning and a lot more. It’s a field that can draw on a number of different areas of expertise, opening the field up to professionals with backgrounds in everything from accounting and taxation to finance and insurance. You can’t get a clear understanding of what salaries are like in the field of financial planning by just looking at one professional category, so we’ve decided to look at them all.

When you take a look at salary trends in all these fields, you just can’t lose, no matter which path you take into the profession.

What you will find here are base salaries that don’t account for commissions, or the bonuses, stock options, and other incentives that are so common in the financial services industry. For many in the industry, the base salary represents only a small amount of the total compensation package. Also consider that in the world of financial planning, salaries only come into play when you’re working for a firm. If you decide to go independent and offer your services on a fee-only basis you’ll be collecting a percentage of every dollar you manage, and as a fee-based planner, you’ll earn commissions on top of that.

Compensation Beyond Salaries: Fee-Only, Fee-Based and Commissions-Based Planners

When you’re talking about what financial planners can expect to earn, focusing exclusively on salaries can miss the mark a little. Of course, anybody hired on with an investment advisor firm and licensed as an investment advisor representative (FINRA Series 65) will be considered a payroll employee and earn a salary. The same is true of licensed brokers (FINRA Series 7) and investment advisors who are authorized to sell securities and other investment products (FINRA Series 66).

But whether you’re working strictly as an advisor – a role that involves being legally bound to the fiduciary duty to offer advice and products solely in the interest of the client… or as a broker – which is a role that has more to do with selling investment products than advising clients and that is not bound to the same fiduciary code – the typical model for compensation goes beyond base salaries to include providing services for a fee, earning a commission for selling products, or a combination of the two.

Here’s how it all works…

Fee-Only –  Since the reputation of the Wall Street crowd suffered a bit in the years following the Great Recession, financial planners have made an effort to set themselves apart from that group. The distinction has always been there, but it became more important to educate the public of that fact as a way to rebuild trust in the financial planning profession. All of a sudden the term “fiduciary” became part of the conversation, thanks largely to the marketing efforts of financial planners who began rebranding themselves and their firms as “fee-only advisors.”

Fee-only advisors sometimes charge a fee on an hourly basis, but more often it refers to a flat percentage fee for all client assets under management, usually 1 – 2%. With a fee-only model, there are no commissions earned for selling investment products, which removes any financial incentive to recommend a higher-commission product over another. While the fee-only model still allows advisors to be compensated very handsomely for their services, it gives clients the assurance that there is no conflict of interest. This gives advisors the freedom to make all recommendations strictly based on what is in the best interest of the client.

Commission-Based – Commission-based compensation is usually reserved for the sales-people of the financial services industry: stockbrokers, less often referred to by their more descriptive official title, securities sales agents. Brokers really are not by any definition considered financial planners or even investment advisors, but they do often work for the same firms, so it’s worth going into how they are compensated here, and how it relates to financial planning.

More to the point is the fact that an individual can be licensed in both roles as a securities sales agent and an investment advisor (FINRA Series 66), a common license among those that represent themselves as financial planners.

To avoid the potential for conflict between commission-based sales and the fiduciary standard that advisors are bound to, investment advisory firms are more and more often going with a strictly fee-based model when offering financial planning services, paying no commissions to the advisors that represent the firm even though those advisors are often licensed to sell securities and other investment products.

Fee and Commission – Financial planners who make some money through commissions often prefer to market their services as “fee-based,” but this almost always means that they charge a fee to clients upfront, plus earn commissions when selling investment products. Just like fee-only advisors, they would charge an hourly fee for services or a flat fee as a percentage of all assets under management, and additionally earn commissions for the securities and investment products they sell.

Although by the very definition of the investment advisor role and the covenants of the FINRA Series 66 license they hold, fee-based advisors are legally bound to the same fiduciary code that any other planner would be, they are not legally obligated to disclose how much they earn in commissions. Though it’s becoming more difficult to market yourself as a fee-based advisor as the public tends to prefer fee-only services, the fee-based model can be one of the most lucrative, providing two income streams from both fees and commissions.

Financial Planner Salary

In 2018, the U.S. Bureau of Labor Statistics (BLS) published a report showing that investment advisers earned an average of $121,770,  and can anticipate job growth of 7% in the ten-year period leading up to 2028. The field of accounting is expected to see 6% growth, and the certified public accountants that represent the upper echelon of this profession earned an average of $78,820 in 2018.

Securities sales agents are expected to see more modest growth of about 9%, and according to the most recent 2018 BLS earnings report, made $98,770 on average.

Some of the most enterprising insurance producers have the life insurance and annuity line of authority and provide the public with some of the most reliable financial planning products available. Insurance producers will see steady growth of 10% in the next eight years. Their average salary of $67,890 nationally does not include commissions earned, which can be a very significant component of their yearly take.

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Stockbroker (Securities Sales Agents) Salary

According to the U.S. Bureau of Labor Statistics, the number of jobs available to stockbrokers in the U.S. is expected to grow 9% during the current ten-year period ending 2018. As a sales occupation, compensation for stockbrokers is largely based on commissions and bonuses, so salary figures alone don’t tell the whole story. According to the 2018 U.S. Bureau of Labor Statistics report, the securities and commodity contract intermediation and brokerage industry employed the most stockbrokers.

Registered reps working for large brokerage firms earned $133,020 on average, considerably higher than the national average of $98,770 for the profession across all industries. Top earners, within the 75th percentile, made an average of $123,320 that year, the majority of which were in New York and California, where the average salaries were $161,580 and $81,610 respectively.

Top paying industries and corresponding average salaries for stockbrokers:

  • Pipeline Transportation of Crude Oil: $156,030
  • Securities and Commodity Contracts Intermediation and Brokerage: $133,020
  • Computer Systems Design and Related Services: $116,840
  • Farm Product Raw Material Merchant Wholesalers: $115,300
  • Professional and Commercial Equipment Wholesalers: $112,240

Investment Advisor Salary

Employment for personal financial advisors is expected to grow at a steady clip of 7% during the current ten-year period ending 2028. According to the U.S. Bureau of Labor Statistics, the national average salary for these registered investment advisers was $121,770 in 2018, while top earners, within the 75th percentile, made an average of $157,710 that year.

As fee-only and fee-based advisors generally charge a percentage for total client assets under management, independent advisors often make considerably more than those earning salaries as employees of large investment advisory firms.

Around 54% of personal financial advisers work in securities, commodity contracts, and other financial investments and related activities, while a full 25% are self-employed.

Top paying industry sectors and corresponding average salaries for investment advisers:

  • Real Estate: $161,860
  • Securities, Commodity Contracts and Other Financial Investments and Related Activities: $129,950
  • Other Investment Pools and Funds: $128,580
  • Grantmaking and Giving Services: $123,140
  • Management of Companies and Enterprises: $117,210

Financial Advisor Salary Information By State