Compensation and Client Wealth Among U.S. Investment Advisors

26 Pages Posted: 5 Apr 2011

See all articles by Luke Dean

Luke Dean

William Paterson University

Michael S. Finke

The American College

Date Written: April 4, 2011


This study uses disclosure data from 7,043 Registered Investment Advisors (RIAs) in the United States to examine differences in client wealth by type of compensation. We find that firms charging commissions and hourly fees have a higher proportion of low net worth clients. Wealthier clients are more likely to be charged performance-based fees and fees based on assets under management. RIA firms that charge commissions are more likely to provide financial planning services and to have a larger number of employees and lower assets under management. Investment advisors who cater to lower net worth clients are more likely to rely on commission compensation, suggesting that policy restricting compensation may impact the provision of advising services to average investors.

Keywords: RIA, investment advisor, financial regulation, commission, fiduciary, household finance

JEL Classification: G20, G28, G29, H31, H32, M52

Suggested Citation

Dean, Lukas R. and Finke, Michael S., Compensation and Client Wealth Among U.S. Investment Advisors (April 4, 2011). Available at SSRN: or

Lukas R. Dean

William Paterson University ( email )

300 Pompton Road
Wayne, NJ 07470
United States

Michael S. Finke (Contact Author)

The American College ( email )

Bryn Mawr, PA 19010
United States

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