IBD Report Card
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How Advisors Are Paid

The ascendancy of fee-based compensation in the independent broker/dealer space continues. Nearly 48 percent of advisors’ compensation comes from asset-based fees, up from 36 percent in 2011. Commissions accounted for another 48 percent of advisors’ pay.

The use of commissions has been on a long-term decline in the IBD world. In 2011, advisors earned 54 percent of their income from commissions. Some firms are more fee-centric than others. Advisors at Cambridge Investment Research, for example, said fees make up 67 percent of their books, compared to 66.5 percent for Raymond James Financial Services, and 65.3 percent for The Investment Center.

“It’s interesting because sometimes we see broker/dealers competing with RIAs, but they’re giant RIAs themselves,” says Philip Palaveev, owner and CEO of The Ensemble Practice LLC.

Other firms are still commission-focused. Investacorp advisors, for example, earn 71 percent of their income from commissions, while Signator advisors say they earn nearly 61 percent from commissions. 

Next: Perks of Being an IBD Advisor

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