Average Salary: $67,520
Expected Lifetime Earnings: $2,819,000
It can be a superb living. For most large firms, private wealth managers charge clients a "1% wrap fee" or something like that. A client brings $50 million of family wealth with them and the 1% or $500,000 a year covers the cost of a guy like Buck who not only looks over the family's investments but also in theory, gets the family into "good deals" and at discount prices. Usually Buck's firm and their partners are such large buyers of a given financial product that they pay "wholesale" or highly discounted commissions.
The good news financially is that an individual money manager can oversee tens of billions of dollars if he has the right clients and really knows his stuff. And inside of the big investment bank, the private wealth manager keeps some geometrically increasing portion of the revenues he brings in. He has a fixed overhead cost, which must be covered first before any profits are given. That number generally includes his own salary and benefits, the cost of his secretary, legal time he chews up, office space, insurance, and so on. If Buck is taking a $200k a year salary, it is likely that he needs $500k to "just break even" from the employing bank's perspective.
But let's say he lands another big pot of money and one day finds himself having 30 clients where his total "assets under management" are more like $10 billion. Maybe he still gets 1% but usually with such high numbers, the client gets a discount. Reload and let's say the wrap fee is really 0.8% per year. Well, on the $10 billion, Buck is bringing in $80 million in revenues to the firm. Now with so much money there comes maintenance. Buck probably warrants having a dozen staff and a full-time lawyer, and has other expenses. Maybe everything together costs $10 million. But then Buck still has $70 million coming in, almost all of which is profit. Is it fair that he should keep…half? Two-thirds? Something like that, anyway. And if the big bank doesn't like it, Buck can take his clients to Rival Big Bank. Or can he? Are the clients more loyal to Buck personally or do they want the feeling of being attached to SilverSlacks, which they perceive to be an awesome financial institution? Depends. Regardless, the money is awesome as long as the clients love ya, baby.
That's either love…or someone just made a poo-poo.
But obviously that is at the high end and the average financial advisor earns a fraction of a million. It's still a good life and you sit in the financial belly of the beast with great connections through your clients.