Resignations are often months in the making. For advisory firm leaders, understanding the impetus behind the decision can help improve employee experience, retention, and overall firm value.
In our recent Dynamics of Human Capital webinar, Director of Business Development Scott Leak spoke with James Sammarco and Jon Vorpagel, Co-Founders of The Third Group, about how they help RIAs and wealth management firms attract and retain talent from entry-level roles up to the executive suite.
Their perspective can help give firm owners a clearer picture of why valuable employees start looking elsewhere, and what to do before that happens.
Industry coverage tends to focus on the competition for advisors with large books of business, but James and Jon also see significant turnover in compliance, operations, portfolio management, and client service roles. Jon also noted that firms he works with report growing their budgets for back-office and client service teams, with 82% of firms allocating more to those roles.
Owners face pressure from the other direction as well. John pointed to an industry estimate that roughly 40% of advisors will retire in the next five to seven years, taking about $10.4 trillion in managed assets with them and creating real opportunity for rising talent. Firms that fail to show those employees a future will lose them.
Pay is a part of nearly every resignation. When candidates change firms, they typically see a 10% to 20% increase in base salary. Skipping raises automatically gives them a reason to listen to recruiters.
James explained that because many owners benchmark pay against their own team without looking at broader trends, they often underestimate how much salaries have increased for firm roles.
External data helps address the blind spots. During the webinar, Scott shared figures from the FP Transitions compensation study, which includes more than 500 firms and nearly 5,000 individuals. At the time of the session, the median base salary for a lead advisor was around $120,000. Base plus bonus brought the median to about $137,000, and total compensation reached roughly $150,000. Experience changes the numbers: a lead advisor with zero to three years in the industry was comped about $110,000, while one with 16 to 25 years reached a median of about $213,000.
Compensation is important, but it’s rarely the only reason employees leave. According to James and Jon, the three most common explanations are:
Lack of flexibility to handle family needs and appointments without worrying about time at a desk
Compensation that falls short
Lack of advancement and new challenges
Jon cited data showing that only 38% of firms have teams with a clear understanding of how to grow. Employees want to know what growth requires, what the next role looks like, and what comes after that.
Owners don’t always know where the firm will stand in three or five years. Jon’s advice is to say so. An honest conversation about uncertainty gives an ambitious employee more confidence than silence.
Culture plays a role too. When webinar attendees named the root cause of their own departures, misalignment with firm culture ranked first. James connected culture back to communication. When leaders leave an employee’s path in a gray area, the employee fills the gap with their own conclusions.
If firm leaders are paying attention, they’ll clock disengagement long before the resignation. James described the early signals he hears about from clients and candidates:
An employee stops turning on their camera in meetings
Work that was always on time starts coming in late
Someone who used to look for growth opportunities starts turning down new challenges
James traced most of the early warning signs to the same source: too little one-on-one attention. Scott added that firms can often still recover the relationship at this stage by addressing the employee’s personal goals, professional goals, career path, and compensation.
The Characteristics of Firms with Strong Retention
Firms that keep good people treat retention as an ongoing practice. Based on the webinar discussion, owners can start with these steps:
Talk more often. A single annual review compresses a year into one hour. Instead, James and Jon recommend monthly one-on-ones, as well as biannual reviews that open with each employee’s professional and personal goals, then connect those goals to where the company wants to go. Informal check-ins count too.
Share the path forward early. Employees want transparency now more than ever. Tell people where they could be in one to two years. Deliver good news about promotions when you know it instead of saving it for year-end.
Benchmark against the market. Compare salaries, bonuses, and total compensation with peer firms, adjusted for role, experience, and cost of living. Internal comparisons alone won’t show you where you’ve fallen behind.
Structure variable pay with intention. Scott suggested that operations staff typically earn 10% to 20% of base salary in variable bonuses, depending on experience and longevity. For advisors, that figure often rises above 20%. He cautioned against tying compensation directly to revenue production, since that structure can hurt firm margins.
Use equity to keep key people. Scott called equity one of the best tools a firm has to retain senior talent and build a clear career path.
Track turnover rate. Jon recommends every firm measure turnover year over year. He sees turnover of 2% to 4% for lead advisors and 10% to 25% for junior and back-office staff. Planning for departures ahead of time helps firms avoid scrambling to fill positions.
Firms that develop their people, define clear career paths, and give key employees a stake in business outcomes build teams that can carry the business forward. See where your firm stands today. Take our Talent Retention Health Check quiz to identify your strengths and areas where there might be room for improvement.