What do Advisors Actually Make? I’m Confused.
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I’ve always been frustrated by the lack of clarity about what advisors earn. And then I did my own research…
Advisor pay matters
There’s lots of talk about fees and how advisors are paid, but very little about what the actual numbers are. There should be more conversations about it. Why?
What you earn matters because it is an expression of the value you create for your clients with your time.
For people who are supposed to be financial experts, I see a great deal of behavior that doesn’t make financial sense. I wish I could say that advisors are practicing what they preach in terms of managing their own financial lives, but the reality is that far too often they are not.
- Trying to be the personal butler for impossible-to-please net-present-value negative relationships. This runs your profitability to the ground.
- Appointing successors who can’t develop new business. I see advisors in excruciating pain from this all the time. Before you sign the paperwork making an employee a partner, make sure they are going to be able to get new clients – not just rely on the ones you brought in for referrals.
- Telling your clients to have three months of cash saved in an emergency fund when your credit cards are tapped out right and left. Or when you’re so strapped for cash that you need to haggle vendors over every little expense – but yet you’re advising business owners about setting up a SEP IRA so you can manage it for 0.75%? It’s one thing if you are just starting out, but these are seasoned advisors. Imagine you go to buy a new car at the Lexus dealership and you find out the salesperson drives Toyota.
If the average advisor isn’t following his or her own advice, how seriously do you expect to be taken as a profession? You don’t think people see through that?