If there are two words to describe the financial remuneration for a Financial Advisor over the last few years, they would be upward and diverse. Over the 20 years of the century so far the average salary in the UK has grown from £19,000 in 2000 to just short of £30,000 in 2018 according to the Office for National Statistics, an increase of just over 50%. Whereas those of us recruiting for Advisors in 2000 will recall that a salary of £25,000 would make a role interesting to candidates, whereas today that number needs to be doubled to compete in the market and even tripled at the higher echelons.
The reasons for the advisor salary increasing by 200% to 300% are numerous. RDR, shifts in distribution models, client demographics and expectations, advances in technology, professionalism including exams and simple laws of supply and demand.
Following 25 years of recruiting Advisors, we have categorised current packages into the following –
Financial Planners operating within an arm of Accountancy or Legal firms are paid good salaries, usually accompanied by full benefits, though we find bonuses are typically 10-20% of basic. Often the Financial Planning element is part of a wider client service and therefore pinpointing what proportion of the fee charged is FP related is intricate and inessential. Some of our professional practice clients are salary plus a company bonus, with no individual bonus paid and no target set. Salaries typically in the £50,000 to £75,000 range. Always a client rich environment.
National/Regional IFA firm
The traditional remuneration model in this environment is salary times multiplier with a bonus over the threshold, usually a multiplier of 3 or 4 times salary and bonus in the 20% to 30% range. Salaries at £35,000 to £50,000 though higher is possible. Greater opportunity to earn than Professional Practice though based on a more modest salary range. Client supply comes more into play in this sector, if an advisor is working mainly or entirely with company supplied leads/client portfolio the multiplier can be higher and bonus lower, when a higher degree of self-generation is required, we would expect lower multiplier and perhaps higher bonus rate.
Investment Management firm
Probably the highest salaries on the market, newer Advisors starting in the £40K to £50K range with their senior colleagues in the £70K to £80K although the top advisors will be looking at salaries in the six-figure plus category, especially and unsurprisingly in the South East. Working alongside their Asset Manager colleagues focusing mainly on Ultra HNW clients with seven-figure portfolios whilst also working with other professionals and business owner types. Bonuses limited in comparison to basic and often paid annually to fit in with the money manager model.
Johnston Greer only works with clients offering employed packages in the type of environments mentioned above, though we do have regular conversations with self-employed candidates. Self-employed is the preferred choice for many Advisors for reasons including maximisation of earnings, ownership of client portfolio with its recurring income, freedom to run own business and sometimes a lifestyle choice that suits. We only move self-employed Advisors to employed roles when they seek to return to a team environment or have decided they would like support regarding clients. There is no salary, and earnings may be £30,000 to £50,000 for those self-employed for lifestyle reasons whereas those fully invested as Advisors may generate £200K income from their £300K revenue, with aspects like costs for third party support and splits coming into play.
Arguably the group that has gone through the most shift over the last few years is the banks. There are only a small number that have Advisors in-branch and the larger global organisations have very small teams of Wealth Managers providing advice to the higher end of the client bank. Salaries have gone up to between £45,000 and £60,000 and they still tend to provide the best benefits, however, the actual and indeed even the word bonus has been removed almost entirely from the banking vocabulary, and frequently replaced by a KPI matrix or similar.
Today’s Advisor is well qualified, and industry experienced with good and often excellent technical knowledge. They deliver quality relationship management and business acumen whilst being tech-savvy consultants and skilled marketers. The contemporary Advisor is an all-round professional delivering an essential service to clients and well worth the 200% to 300% pay-rise they have received over recent times.