In the competitive world of wealth management, equity compensation has emerged as a pivotal tool for registered investment advisory (RIA) firms aiming to attract and retain top financial advisors. According to Financial Planning, large RIAs are increasingly offering equity ownership as part of their compensation plans.

Financial Planning reports that Snowden Lane Partners, a New York-based independent wealth management firm, exemplifies this trend. According to CEO Rob Mooney, advisors joining the firm are strongly encouraged to include equity in their transition packages. Advisors receive between 10 percent and 50 percent of their bonuses in company shares, with a seven-year vesting period culminating in a "cliff" award.

According to Financial Planning, the broader trend is evident in Charles Schwab's 2024 Benchmarking study, which found that one-third of employees across more than 1,300 RIAs hold equity ownership. Larger firms are leading the charge, with two-thirds of RIAs managing at least $5 billion in assets offering equity to new advisors. Schwab's report highlights equity as a vital tool for retaining talent and facilitating succession planning.

Equity ownership, in the form of rollover equity, also plays a growing role in RIA acquisitions and succession deals. According to a Mercer Capital white paper, rollover equity has become a popular component of purchase-price allocations. This structure aligns the interests of acquired advisors with their new firm while offering downside protection for acquirers. For advisors, it provides the dual benefits of continued ownership in their operations and potential gains from the firm's growth.

Finally, Financial Planning reports that independent firms like Steward Partners are taking equity ownership further by offering it to all employees, including support and back-office staff.

Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.