posted on August 27th 2020 in Financial Planning & Newsletters with 0 Comments /

By Allison Blake

For most financial advisors, owning your own firm sounds like a dream. You set your own schedule. You call all the shots. You take home all the profit. 

But even if you’re pocketing all the profits, do you really earn more as a solo advisor than you would at a larger ensemble firm? Let’s find out.  

What Percentage Of Revenue Do Solo Advisors Take Home?

As a solo advisor, you get to keep 100% of the profit you earn. For most small firms, this ends up being around 65% of revenue after you account for expenses. (1)

The unfortunate news is, as your firm grows, your profits may actually go down. According to an InvestmentNews study, expense ratios for smaller firms typically increase as the firm takes on new business. (2) Why? Because you have to bring on new staff and infrastructures to support you. It’s harder to scale.  

On the other hand, bigger firms typically see decreased expenses as they grow due to economies of scale. That’s the case here at WorthPointe. As our firm grows, we become more efficient. As our expenses decrease, our profit margins increase. 

This begs the question, is it really such a big deal to bring home 100% of the profits if you can’t scale the same way larger firms can? Could you earn more with a smaller percentage of revenue?

Percentages Aren’t Everything

When talking about how much advisors make, the percentage you take home isn’t the whole picture. You have to look at total compensation.

As a solo advisor, you get to keep 100% percent of the profit, but that may not be much when you look at your compensation as a whole. On top of meeting with clients, you’re responsible for bookkeeping, billing, marketing, and a lot of other tasks that don’t directly increase your bottom line. Your potential to grow is limited by your time. You’ll tend to have a high profit, but a small business, so total compensation may not exceed a lower margin, larger business.

As part of a larger firm, you have the opportunity to build a bigger book. All those operational tasks get taken off your plate, so you can pour all your time into what you do best—focusing on your clients and prospective clients. 

You may not take home 100% of the revenue as you used to, but you’re getting a slice of a bigger pie. In most situations, this slice adds up to be more than what you’d earn on your own. 

Don’t Forget About Equity Value

Equity value is also a big part of the compensation equation. At an ensemble firm that offers equity, your portion of equity is likely worth much more than when you were running a solo business, thereby giving you a much higher net worth. 

When you own your own firm, your profit margin might be 65%, but your net worth might be tiny. When you’re part of a larger firm, your take home percentage might be less, but your net worth might be considerably higher due to equity value. 

Having a successful business is about equity value, not only profit margin. It may be better to have a less profitable large business than it is to have a highly profitable tiny business. At the end of the day, would you rather have 100% of $100,000 or 1% of $50 million?

Ready To Earn More? 

Bill Gates gave away a huge percentage of Microsoft to Paul Allen to succeed. He became the richest man in the world by focusing on the value of his slice, not the percentage he owned. Remember this as you build your career as a financial advisor. You may own 100% of the profits now, but you could earn even more with a smaller slice of a bigger pie. 

At WorthPointe, we focus on growing the pie, not just the percentage. As our book of clients grows, so does our advisors’ income and equity value. If you’d like to take a part in our growth, we invite you to learn more about who we are and what makes us different. To get started, contact us today at (800) 620-4232 or email us at

About WorthPointe

WorthPointe is a financial planning firm based in San Diego, Austin, Dallas-Fort Worth, and Jackson, WY. We provide a home for CERTIFIED FINANCIAL PLANNER® so they can enjoy their independence while also focusing on what’s most important: people. Our centralized operations team takes the burden of running the business off your back, handling compliance and HR, bookkeeping, billing, and trading, so you can use your time to serve your clients. Our firm is at the forefront of the industry, providing you with support, connection, growth, and a healthy work/life balance so you can achieve all your professional and personal goals. Learn more about becoming a partner with WorthPointe and leaving your employee days behind here.




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