How much do you make as an RIA? — Practical guide for founders and advisors

Quick answer: what RIAs typically earn

There is no single answer to how much you make as an RIA because earnings depend on total assets under management, fee model, client mix, and the firm cost base. If you are asking how to start an RIA, expect that firm-level variables will shape both revenue and owner distributions more than any headline salary number.

For employee advisors, public salary data give a reasonable median benchmark, but those figures do not capture owner distributions or profit-share that many founders rely on. The U.S. Bureau of Labor Statistics provides a commonly used occupational benchmark for personal financial advisors that is useful for salaried roles BLS Occupational Outlook. See our personal finance coverage for related compensation and career pieces.

Below we unpack the core drivers so you can translate assets and pricing into projected revenue and realistic take-home pay. Sections include fee models, how AUM and client mix drive revenue, a step-by-step estimator you can apply, and quick scenarios to illustrate typical tradeoffs.

How to start an RIA: revenue drivers you need to understand

Starting an RIA means setting up a registered advisory business that provides financial advice and manages client assets. Firms vary: some focus on comprehensive financial planning, some on investment-only portfolio management, and others combine planning with tax coordination. Regulators require registration and fee disclosure, but they do not prescribe compensation levels; the SEC’s adviser registry and disclosure resources explain registration and disclosure requirements.

Total AUM, fee model, client mix, and operating costs are the main levers that determine whether a new firm will be profitable and how much founders can pay themselves. Industry benchmarking studies emphasize that total assets under management and AUM per advisor correlate strongly with firm revenue, so scale matters when you decide how to start an RIA Schwab RIA Benchmarking Study.

How you package services matters. High-touch comprehensive planning can justify higher fees but increases time and cost per client, while investment-only services scale differently and may work better if you target larger accounts. Think about the client types you want to serve before settling on a fee model.

What an RIA does and compensation basics for employees and owners

An RIA delivers financial advice, portfolio management, and related services. Employees often receive salaries and bonuses; public labor statistics are a useful starting point to estimate market pay for these roles. Use BLS salary data as a median anchor for employee compensation, but treat it as an incomplete view when you consider founder income BLS Occupational Outlook.

Owners typically extract income through a mix of salary, distributions, and profit-share. Benchmarking reports show that owner pay often depends more on firm profitability and distributions than on published salary medians, so compare your revenue model against industry benchmarks when forecasting owner take-home Schwab RIA Benchmarking Study.

Operational reality matters: local market rates, the services you offer, compliance and technology costs, and hiring choices can create very different net outcomes even for advisors managing similar asset levels.

Common fee models and how they affect revenue

Three fee models dominate current practice: percentage-of-AUM, flat subscription or retainer, and hourly or ad-hoc billing. Many firms now use hybrids to match client needs and stabilize revenue streams, a trend seen across advisor-focused research Advisor Fee Models and Compensation Structures.

AUM-based fees scale directly with assets, usually via a tiered sliding scale where percentages decline as assets rise. Industry reports note that effective advisory rates tend to fall for larger accounts because of tiered schedules and pricing for scale Schwab RIA Benchmarking Study. For more recent benchmarking perspectives see the Schwab 2025 RIA report 2025 RIA Benchmarking Study.

Subscription or retainer models can make revenue more predictable and allow firms to serve lower-AUM clients without relying solely on asset thresholds. Practitioner surveys show firms adopting subscription or hourly fees to improve revenue stability and broaden their addressable client base InvestmentNews industry coverage.

When you compare models, consider client suitability and scalability. AUM fees fit clients with sizable investable assets, while subscription fees can be easier to explain to younger clients or those with complex planning needs but less investable capital.

How AUM, client mix, and services determine firm revenue

Benchmarking studies consistently identify total AUM and AUM per advisor as primary drivers of revenue per advisor across firms. In practice, firms with more assets and higher AUM per advisor report materially higher revenue per advisor, which translates into higher potential owner distributions when costs are controlled Schwab RIA Benchmarking Study.

Client mix changes unit economics. Institutional accounts and larger retail households often yield lower service time per dollar of revenue, while many small households require more planning time per account. Reports note that household size, account minimums, and service depth materially shift firm economics Cerulli U.S. RIA Marketplace and Revenue Trends.

Higher-touch services like comprehensive planning or tax coordination can justify higher fees but also raise costs for staffing and tools. When projecting revenue, model both the revenue uplift and the incremental costs for elevated service packages.

Pricing frameworks for new RIAs: choosing a fee model

Use a simple checklist to compare fee models for your target clients and goals. Score options on client AUM distribution, desired revenue stability, scalability, compliance burden, and disclosure clarity. Keep the checklist practical and testable.

Piloting a fee change can reduce risk. Offer a time-limited pilot to a small cohort or grandfather existing clients at prior rates while testing new pricing for incoming clients. Track churn and profitability during the pilot before broad rollout.

Estimating owner take-home: a step-by-step calculation

Before doing any math, gather the inputs you need: total AUM, an effective advisory rate that reflects your mix of fees, recurring non-AUM revenue like subscriptions or retainers, operating expenses, number of advisors, and an estimate for taxes and distributions. Industry benchmarking reports provide ranges to help validate assumptions when available Cerulli U.S. RIA Marketplace and Revenue Trends.

Step 1, compute gross advisory revenue: multiply Total AUM by your effective advisory rate. Step 2, add recurring non-AUM revenue such as subscriptions or hourly fees to get total top-line revenue. Step 3, subtract operating expenses including compliance, technology, marketing, and payroll to calculate operating profit. Step 4, allocate profit between owner salaries, reinvestment, and distributions; owners should set a realistic salary before distributions. Use this framework to model different scenarios.

Remember that effective advisory rate is not always the headline AUM percentage because tiered schedules and client discounts reduce average fees as AUM grows. Adjust the effective rate in your model to account for these effects to avoid optimistic estimates.

Typical mistakes and pitfalls when launching or pricing an RIA

One common error is relying solely on AUM fees and assuming new clients will reach high asset levels quickly. Firms that fail to plan for lower-AUM clients can experience unstable revenue and slower growth. Practitioner coverage highlights the shift toward diversified fee models to manage this risk Advisor Fee Models and Compensation Structures.

Another pitfall is underestimating operating costs. Compliance, technology, and client service staffing are often larger line items than founders expect, and they reduce owner distributions unless priced into fees. Benchmarking reports call attention to these often-overlooked costs Cerulli U.S. RIA Marketplace and Revenue Trends.

Avoid changing fees without clear documentation and client communication. Fee changes require proper disclosure and, in many cases, client consent or grandfathering to maintain trust.

Practical scenarios: sample firm models and outcomes

Scenario one, a lower-AUM, subscription-focused firm: this model emphasizes recurring monthly revenue from clients with modest investable assets. It can increase client access and stabilize cash flow, but it typically requires more client onboarding and ongoing planning time per household, which raises staffing needs.

Scenario two, a higher-AUM, AUM-fee firm that offers high-touch planning: this setup tends to scale revenue more quickly per advisor because fees rise with assets, and high-touch clients often accept higher advisory percentages. However, high-touch services mean higher per-client servicing costs and sometimes longer sales cycles.

Scenario three, a hybrid firm that transitions from AUM-only to a mix of subscriptions and AUM: many firms use hybrids to keep access for lower-AUM segments while preserving revenue from larger accounts. Industry studies note that hybrids are increasingly common as firms seek revenue stability and broader client reach InvestmentNews industry coverage. For further benchmarking insights see the InvestmentNews 2025 advisor study InvestmentNews 2025 Advisor Benchmarking Study.

Decision criteria: is starting an RIA right for you?

Consider these factors: your target client AUM profile, the capital and operating runway you can support while growing, your comfort with regulatory and compliance responsibilities, and local market competition. SEC resources can help you understand registration and compliance basics for advisers Investment Adviser Public Disclosure. Also review our investing coverage for context on market and product choices.

If you prefer fewer administrative burdens and immediate salary stability, joining an existing firm may make more sense than launching. If you value control and have a clear plan to reach scale, starting an RIA can align with long-term goals, but expect more income variability initially.

Checklist: actions to prepare before launching your RIA

Build an AUM-based revenue model and run expense and break-even scenarios. Include conservative assumptions for client acquisition and initial churn so you do not overstate near-term owner pay.

Draft required registrations and disclosures and map compliance tasks to a timeline. Collect local market benchmarks and, when possible, at least one industry benchmarking report to validate assumptions; note that some reports may be paywalled and require a purchase or subscription Schwab RIA Benchmarking Study.

Test fee structures with a small client cohort or pilot before full rollout and document the results to guide broader pricing decisions.

Where to find data and benchmarking (primary sources and reports)

For registration and fee disclosure use the SEC’s adviser database and guidance. It explains what disclosure is required and how advisers register with regulators Investment Adviser Public Disclosure. You can also consult public benchmarking reports and practitioner coverage; see our homepage for a starting list Finance Police.

For public salary data use the Bureau of Labor Statistics for median wages and occupational context. For firm-level revenue patterns and benchmarks, consult industry reports and vendor benchmarking studies; these often provide the best view of how AUM and AUM per advisor relate to revenue per advisor, though some are paywalled BLS Occupational Outlook.

Trade press and practitioner research summarize trends and shifts in fee models, which can be helpful background if you cannot access paywalled benchmarking directly Advisor Fee Models and Compensation Structures.

Glossary: key terms every aspiring RIA founder should know

AUM: assets under management, the total client assets your firm oversees; this directly influences AUM fee revenue and firm scale.

Effective advisory rate: the average advisory percentage you actually collect across clients after tiers, discounts, and non-AUM fees; use this in revenue models.

EBITDA margin: a profitability measure that shows operating profit before interest, taxes, depreciation, and amortization; it helps compare firm-level efficiency across peers.

Subscription model: a recurring-fee approach where clients pay a flat retainer or monthly fee for access to services rather than a percent of assets.

Fee disclosure: the documented description of fees and conflicts you provide to clients, required by regulator filings and client agreements.

Conclusion: realistic expectations and next steps

The biggest drivers of an RIA’s revenue and owner pay are total AUM and the fee model you choose, combined with client mix and fixed costs. Use benchmarking reports to validate your assumptions and build multiple scenarios before committing resources to a launch Schwab RIA Benchmarking Study or the Schwab 2025 benchmarking overview Schwab RIA Benchmarking Study 2025.

Next steps: gather your inputs, run the step-by-step estimator above, pilot fees with a small cohort, and gather market benchmarks. Treat initial forecasts as working documents that you update with real firm data as you grow.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.