AUM is up. Profit per partner isn’t.
Your assets under management are climbing. Revenue is up double‑digits year over year. Client retention is strong. And profit margin is sitting at 18% when top firms in your space run 27–30%. That’s not a sales problem. It’s the same financial pattern Fidelity, Schwab, and Cerulli have all flagged in their 2024–2025 benchmarking — advisory expenses outpacing revenue growth, per‑advisor economics nobody calculates, and small accounts eating capacity that should be funding scale.
For US‑based RIAs, wealth management firms, and fund administration businesses doing $1M–$20M in revenue.
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Most RIA benchmarks measure overhead percentage. I measure margin per advisor. Here’s why that matters.
If you’ve read the Schwab, Fidelity, or InvestmentNews benchmarking studies, you’ve seen profitability framed as operating margin or overhead expense ratio. Industry average sits at 65–75% overhead, leaving 18–25% operating margin. Top performers are at 70%+ overhead with 27–30% margin from sheer scale and tech leverage. The frame is correct but misses the diagnostic. I run 60/15/15 with per‑advisor economics layered on top: 60% gross margin, 15% sales & marketing, 15% general & administrative. That leaves 30% operating margin — the same target top RIAs hit, with three diagnostic levers and a per‑advisor profitability number underneath each one.
Industry typically lands at 50–58% once advisor comp is properly classified.
$500K+ for top quartile firms.
Benchmark for scaling teams.
Each line stays disciplined — combined 30% with 60% gross margin leaves 30% operating margin.
Industry average sits at 18%. If you’re cross‑referencing this against Schwab’s RIA Benchmarking Study, Fidelity, or Cerulli — the destination is the same. Top quartile firms hit 27–30% operating margin. Most don’t.
Bigger RIAs are less profitable than smaller ones. Counterintuitive. And it’s the entire issue.
I’ll show you the math. This isn’t an opinion — it’s straight from Michael Kitces using InvestmentNews benchmarking data, corroborated by Fidelity’s 2023 numbers. Solo RIA at $500K revenue: 35% overhead, 65% to owner comp and profit. Mid‑sized RIA at $5M revenue: 65–75% overhead, 18–25% operating margin. A $5M RIA at 18% operating margin keeps $900K. The same RIA at 28% keeps $1.4M. Same AUM. Same advisors. $500K per year difference, every year. The gap isn’t a sales problem — it’s three structural problems compounding.
Per‑advisor economics not calculated
Most owners track total revenue and total comp. Almost none calculate fully‑loaded per‑advisor profitability — comp + allocated overhead + tech infrastructure + paraplanner support. The blended number tells you the score. It doesn’t tell you what to fix.
Small accounts eating senior advisor capacity
51% of advisors cite admin overhead and time on small accounts as the top growth barrier (Schwab 2024). The bottom 50% of clients usually generate 10–15% of revenue while consuming 40–50% of senior advisor time.
Fee compression outpacing infrastructure savings
AUM grew 17% in 2024. Revenue grew 18%. But for many RIAs, per‑client fee yields dropped — revenue grew slower than AUM and infrastructure costs grew faster than both. The framework closes the gap in a fixed order: COGS first, S&M second, G&A third.
The margin leak isn’t hypothetical. It’s measurable.
For RIAs, every dollar runs through four numbers.
60% gross margin (revenue minus advisor comp, paraplanner time, custodian and clearing costs), 15% sales & marketing, 15% G&A, 25–30% operating margin. Every dollar a healthy RIA spends gets categorized against these four numbers — with per‑advisor profitability layered underneath gross margin so you always know which seat is funding the firm and which seat is bleeding it.
In RIAs, advisor‑level economics is where you bleed first. And it’s where you fix it first.
Most RIA owners think their cost problem is technology, compliance, or office overhead. It usually isn’t. The healthy gross margin for an RIA at $1M–$20M is 60%. Most RIAs I look at are running 45–55%. The 5–15 point gap shows up in three diagnostic levers.
Per‑advisor economics that nobody actually calculates
Revenue per advisor should hit $300–500K minimum, with top‑quartile firms above $700K. The number you actually need: gross profit per advisor = (revenue generated by that advisor) − (their fully‑loaded comp) − (allocated overhead). Once computed, the picture usually shows three tiers: top advisor running 60%+ gross profit margin, middle tier at 30–40%, and one or two advisors running at break‑even or negative. Invest in the top tier, develop the middle, and have honest conversations with the bottom.
Small accounts eating senior advisor capacity
Bottom 50% of clients in most RIAs generate 10–15% of revenue while consuming 40–50% of senior advisor time. A senior advisor at $300K loaded comp spending 40% of their time on accounts generating $50K total revenue is generating effective $125/hr while needing $300+/hr to be profitable. The fix is service tiers — 60–70% of small clients accept reasonable transitions. The freed senior advisor capacity is worth $200–400K of new business per advisor per year if redeployed into business development.
Fee yield compression hiding inside revenue growth
Fidelity’s 2023 data showed advisory expenses reached 82% of revenue — a record low operating margin. The benchmark to track quarterly: revenue per $1M of AUM by client segment. A 3% annual yield decline on a $500M AUM book is $150K of revenue gone per year, compounding. The fix isn’t a mass fee increase — it’s structural: minimum fee floors on new accounts, planning fees on top of AUM fees, and explicit pricing discipline at client review meetings.
58% of RIAs don’t have a succession plan. The math is brutal.
If you took 90 days off — no calls, no emails, no decisions — what happens? In most RIAs I look at, three things break: the largest client relationships call asking for you specifically because the relationship is with you, not the firm. New business stalls because you’re the closer. Strategic decisions on hiring, technology, M&A, and compliance grind because you’re the final voice.
That’s not an RIA. It’s a senior advisor with infrastructure. Practices like this sell at 1–2x revenue (or 4–6x EBITDA). RIAs that run independently with documented client coverage, ensemble service models, and a delegated CEO sell at 2–3x revenue (or 8–12x EBITDA) to PE‑backed acquirers. Same revenue, completely different exit. On a $5M RIA, that’s the difference between a $5M sale and a $15M sale.
The data is brutal: only 42% of RIA firms have a written succession plan (Schwab 2025 study, lowest since tracking began). 37% of RIA advisors will retire in the next 10 years, representing roughly 35% of all RIA assets. Strategic acquirers (PE‑backed firms) made up 87% of RIA M&A deals in early 2025. The market is consolidating fast and most owners are unprepared.
The fix is what I call “firing yourself” — not retiring, but building the firm so it doesn’t depend on you in three places at once: senior advisor, closer, and decision‑maker. It’s an 18–24 month process and it’s the single biggest enterprise value lever any RIA has. This is also why “we just need more AUM” is the wrong answer. Bigger numbers in a more dependent firm don’t move the multiple.
Want to see where your RIA sits against 60/15/15?
Book the Leak Check. I’ll work through your rough numbers — AUM, revenue, advisor count and comp, client tier mix, owner comp — and show you the top 3–5 leaks with dollar ranges. No documents, no prep. You keep the Leak Map either way. 15 spots per month.
What this looks like in real businesses.
“1–2x vs. 2–3x revenue — the exit gap an owner‑dependent practice cannot afford.”
“$0 to $300K MRR with an embedded fractional CFO from day one.”
“Positioned for a 3–5x exit multiple — the conversation, not the spreadsheet.”
Same revenue. Completely different exit.
Owner‑dependent practices sell at 1–2x revenue. RIAs with documented succession, ensemble service models, and a delegated CEO sell at 2–3x revenue to PE‑backed acquirers. On a $5M RIA, that’s the difference between a $5M sale and a $15M sale.
Strategic acquirers (PE‑backed firms) made up 87% of RIA M&A deals in early 2025. Only 42% of RIA firms have a written succession plan — the lowest since Schwab began tracking. 37% of RIA advisors will retire in the next 10 years, representing roughly 35% of all RIA assets. The market is consolidating fast and most owners are unprepared.
The fix is “firing yourself” — not retiring, but building the firm so it doesn’t depend on you in three places at once: senior advisor, closer, and decision‑maker. An 18–24 month process and the single biggest enterprise value lever any RIA has.
Find out where your firm’s margin is leaking.
Most RIAs in the $1M–$20M revenue band have $300K–$600K of profit and tax leaks hiding in per‑advisor economics, client tier structure, fee yield compression, and exit positioning. The Leak Check finds them. We work through your rough numbers and produce a 1‑page Leak Map: top 3–5 leaks with dollar ranges, ranked by 12‑month impact. 15 spots per month.
For US‑based RIAs, wealth management firms, and fund administration businesses doing $1M–$20M in revenue.
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Clear answers to the questions owners ask before deciding what to do next.