According to the FPA's 2005 Compensation and Staffing Study, revenue at independent financial advisory firms grew by 25 percent on average in 2004. The firms also added 21 new clients and increased assets by $28.9 million, on average. Seems only fair that the owner should get the biggest piece of the pie, no?
Among the 464 firms surveyed, the largest expense was owner compensation, accounting for 23 percent of the average firm's revenue. But don't call them greedy: Not only was employee compensation the second largest expense (16 percent of revenue), but owner pay decreased (in general, see chart) as revenue rose. (The typical firm in the survey has 4.5 employees and $1 million in revenue.)
Owner Compensation as Percent of Revenue
| Firm Revenue Compensation | Owner |
|---|---|
| < $250,000 | 28.0% |
| $250,000-$500,000 | 27.5 |
| $500,000-$1 million | 25.5 |
| $1 million-$2 million | 23.5 |
| $2 million-$3 million | 16.5 |
| $3 million-$5 million | 16.5 |
| > $5million | 24.0 |
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