Many financial advisors get paid a base salary plus any performance-based bonuses they may have earned that year. However, it really depends on whether the financial advisor is employed by a large company or is a self-employed registered investment advisor (RIA).
As of May 2021, the median annual salary for financial advisors was $119,960, according to the Bureau of Labor Statistics, while the highest-paid earned more than $158,000. Many banks and brokerage firms compensate employees with a base salary, then add bonuses for bringing in new client accounts or selling certain products over others.
Financial advisors can earn a simple commission for selling financial service products, such as real estate, stocks, insurance or loans. However, they may also receive a fee for developing a financial plan for clients on top of receiving a commission on the products they sell. Companies such as AIG, Ameriprise, and UBS generally pay employees on commission.
Financial advisors who get paid on a fee-only basis are usually self-employed RIAs. These self-employed financial advisors can charge an hourly fee, a flat fee or a retainer fee for their services. With an hourly fee, clients simply pay for the amount of time their financial advisor spends working on their case. Financial advisors can also set a flat fee for certain packages of financial services. A retainer fee is based on the size or value of the assets the financial advisor handles for the client. In most cases, the financial advisor charges a certain percentage of the assets he handles or a percentage of the client’s net income.