“It's good to be boss,” says today's top story from Investment News. “Owners, top advisers see double-digit pay hikes.”
Sure, it’s good to be the boss at an RIA when you’re riding a four-year bull market!
But let’s not forget the pay cuts advisors took in 2008 and 2009, which slashed pay for the very same owners and top advisors by 50% or more.
The IN story does mention that, despite the pay gains, advisors are facing stuiffer competition and they are the people who are at risk in falling markets, but it's worth drilling down into those trends for a little deeper.
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Stealthy competition from venture-fund-backed companies that make online apps as well as new low-cost solutions from discount brokers are slowly — almost imperceptibly — executing on plans to take market share away from advisors.
These competitors may seem crude substitutes for what you do for your clients. However, these competitors — who you probably do not think are threats to you today — will likely over the next five or 10 years become a more serious threat to you.
If you want to grow your practice over the next five or 10 years, find ways to lower the cost of your personal advice. Consider delivering ETF and index fund solutions and automation of financial tasks clients care about, including financial planning, and scalable, tech-driven solutions.
Don’t celebrate your pay increase too long. You have plenty of work to do.