Entering the field of financial advising can be lucrative, but earnings vary widely depending on factors like education, certification, firm, location and clientele. Experience is one of the most important drivers of financial advisor compensation, with veteran advisors typically able to bring home several times the earnings of newcomers to the field. Understanding the salary ranges and components for new advisors can help those aspiring to this career make informed decisions.
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Average Base Salary for New Advisors
Financial advisors are high earners compared to most workers. According to the U.S. Bureau of Labor Statistics (BLS), the median pay for personal financial advisors as of May 2023 was $99,580 per year or nearly $48 per hour. That hourly rate is more than twice the $23.11 average of all occupations.
However, new advisors typically start out earning more modest sums. The BLS indicates that the lowest-paid 10% of financial advisors earned less than $48,730 per year, equal to an hourly wage of $23.43 or just barely more than the average for all occupations. The lowest 25% of advisors, meanwhile, earned under $65,360. Using this BLS data, we can estimate the starting base salary for many new financial advisors to be $45,000 to $60,000 per year.
Higher Pay with Certifications
Some new financial advisors can manage to earn significantly more than the average salaries. One way starting advisors can increase their earnings potential is by obtaining professional certifications. Some of the most common certifications include:
- Certified Financial Planner (CFP): This high-level certification requires completing specific educational requirements, passing a rigorous exam and acquiring industry experience.
- Chartered Financial Analyst (CFA): Earning the CFA designation involves passing three separate six-hour exams.
- Certified Public Accountant (CPA): This professional certification is particularly helpful for tax planning and also calls for passing a tough exam on tax laws and general accounting topics.
Advisors who obtain credentials like these tend to command higher salaries, possibly 30% or more. They can also help you get more clients if you’ve started your own firm, showing your knowledge and ability. That’s not the only way to find new clients, though. Add new clients and AUM at your desired pace with SmartAsset’s Advisor Marketing Platform. Sign up for a free demo today.
Industry and Location Factors
The industry an advisor works in can also significantly impact earnings. The highest-paying industries for new financial advisors include:
- Securities and commodity contracts have a median salary of $150,540
- Credit intermediation activities have a median salary of $106,320
- Insurance agencies and brokerages have a median salary of $95,040
- Management of companies have a median salary of $136,600
- Accounting and tax preparation have a median salary of $91,710
Location also plays a role. Advisors in major metropolitan areas like New York, Los Angeles and San Francisco can earn over $120,000 to start. Those in smaller markets may begin at closer to $80,000-$90,000. The top-paying states include New York, New Jersey, Pennsylvania, Massachusetts and Alaska.
Other Salary Components
In addition to base salary, new advisors may earn money through commissions, bonuses and profit sharing. For example, an advisor may receive a percentage of the management fees charged to clients. They may also receive bonuses for bringing in new clients or assets under management. A first-year bonus might range from $5,000 to $20,000 in compensation on top of base salary.
Long-Term Outlook and Growth Potential
The job outlook for financial advisors is robust. The BLS has projected advisor employment to grow around 13% from 2022 to 2032. That’s much faster growth than the average job outlook.
Demographics reliably drive this trend. As more baby boomers retire, demand for retirement planning advice is expected to rise. And as 401(k)s replace pensions, more individuals will seek guidance on investing in these accounts.
With a few years of experience under their belt, advisors can increase their salaries substantially. The median pay spikes to $122,968 for a Financial Advisor and $146,671 for a Senior Financial Advisor according to Glassdoor data. The top 10% of advisors earn $208,000 or more.
Just staying on the job can help, but advisors also can be proactive about increasing their earnings. In particular, attracting new clients and bringing in more assets to manage are key factors in boosting pay over time.
Bottom Line
New financial advisors can expect to earn $45,000 to $60,000 a year when starting out. Experience, credentials, firm, industry, location and clients served all impact pay. While starting salaries may seem modest, the potential to grow earnings over time makes financial advising a lucrative long-term career choice.
Tips for Financial Advisors
- If you start your own firm it may not be as easy as you think to hit the salary you want. You might be able to speed up that process with some help in finding new client leads. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
- One of a financial advisor’s most useful abilities is to suggest how to allocate your funds among various asset types. SmartAsset’s asset allocation calculator lets you suggest a risk tolerance profile and then assists you in tailoring an allocation that fits your needs.
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FAQs
Very generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could also be higher, such as $500,000, $1 million or even more.
How much money should I make before getting a financial advisor? ›
Very generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could also be higher, such as $500,000, $1 million or even more.
What do top 10% of financial advisors make? ›
Level 1 Financial Advisor – earns $100K-$300K
At the higher end, $300,000, puts the advisor in the top 10% of household income in the United States, which is not bad at all. Many of these advisors have earned professional designations that allow them to offer more services and expertise to their clients.
How much do financial advisors make us? ›
Financial advisors in the United States typically make between $50,000 and $110,000 per year, with the average salary being around $75,000. However, this can vary based on experience, location, and the type of advisory services provided.
What is the average age of new financial advisors? ›
The financial advisory industry faces a significant demographic shift, with the average age of advisors in the U.S. at 56 and about 20% set to retire in the coming years.
Is 2% fee high for a financial advisor? ›
Answer: From a regulatory perspective, it's usually prohibited to ever charge more than 2%, so it's common to see fees range from as low as 0.25% all the way up to 2%, says certified financial planner Taylor Jessee at Impact Financial.
Is being a financial advisor lucrative? ›
A successful financial advisor is well compensated. The mean annual income for those in the field nationwide was almost $150,000 as of May 2023, though the median salary is just under $100,000.
How much did you make your first year as a financial advisor? ›
New financial advisors can expect to earn $45,000 to $60,000 a year when starting out.
How much can a financial advisor make you with 100k? ›
Percentage-Based Advisors
This fee can range from 0.5% to 2%. Advisors that charge a percentage usually want to work with clients with a minimum portfolio of about $100,000. This makes it worth their time and will allow them to make about $1,000 to $2,000 a year.
What type of financial advisors make the most money? ›
High Paying Financial Planner Jobs
- Investment Consultant. Salary range: $97,500-$155,000 per year. ...
- Senior Wealth Advisor. Salary range: $112,000-$147,500 per year. ...
- Finance Advisor. ...
- Portfolio Manager. ...
- Private Wealth Advisor. ...
- Certified Financial Planner. ...
- Financial Planning Consultant. ...
- Pension Consultant.
Financial advisors can recommend equities or funds for a client's portfolio and typically earn a commission for selling financial and investment products, but salaried advisors receive a base salary and do not rely on commissions. You can, however, receive performance bonuses and other incentives.
What state pays financial advisors the most? ›
Best-Paying States for Financial Advisors
The states and districts that pay Financial Advisors the highest mean salary are Alaska ($229,730), New York ($203,070), New Jersey ($174,490), Pennsylvania ($163,400), and Massachusetts ($154,930).
What is the best salary for a financial advisor? ›
While ZipRecruiter is seeing salaries as high as $155,161 and as low as $38,790, the majority of Financial Advisor salaries currently range between $80,800 (25th percentile) to $141,200 (75th percentile) with top earners (90th percentile) making $147,618 annually in Los Angeles.
Is there a shortage of financial advisors? ›
The country's advisors are retiring, along with their baby boomer cohorts, exactly when those clients need advisors' services the most. Nearly 40 percent of financial advisors are expected to retire in the next decade, and the replacement rate is not keeping up.
How many financial advisors fail in the first year? ›
Meanwhile, the rookie failure rate hovers around 72%. As the industry grapples with such a low success rate for new advisors entering the industry, firms must grow their talent pipeline and better communicate the role and training timeline of a financial advisor.
Is 30 too old to become a financial advisor? ›
Becoming a financial advisor in your mid-30s is a great idea since the average age of financial advisors is typically in the early 50s. This trend indicates that the profession accommodates those who enter later in life. Starting a financial career in your mid-30s is feasible and rewarding.
At what point is it worth getting a financial advisor? ›
Life events. Graduating college, getting married, expanding your family and starting a business are some major life events that might cause you to reevaluate your financial situation. A financial advisor can help you manage these life events while making sure you get or stay on track.
Is a 1 fee worth it for a financial advisor? ›
On average, financial advisors charge between 0.59% and 1.18% of assets under management for their asset management. At 1%, an advisor's fee is well within the industry average. Whether that fee is too much or just right depends entirely on what you think of the advisor's services and performance.
At what net worth do I need a wealth manager? ›
Working with a wealth manager does not require a specific net worth threshold. Whether you are just starting to build your wealth or are already managing significant assets, they can provide personalised advice to help you meet your goals.
What is a good percentage for financial advisor? ›
One common method is for advisors to charge a percentage of the assets they manage on your behalf. This rate often ranges from about 0.5% to 2% per year. For example, if an advisor manages $1,000,000 for you and charges a 1.2% fee, you would pay $12,000 annually for their services.
