OMPENSATION IS A TRICKY SUBJECT IN ANY SERVICE business , where the primary assets go in and out the front door every day . Devising a comprehensive compensation plan for advisory firms gets particularly complex , because it says a lot about where firms place their priorities .

But as consultant Philip Palaveev writes in this month ’ s cover story on page 32 , the availability of talent also plays a key role in determining compensation . As he notes , quarterbacks are rarely the best players on football teams ( with a few exceptions like the Kansas City Chiefs ’ Patrick Mahomes ), but they are usually the highest paid because their position is so important and their skills are hard to find .

As firms grow bigger and the need for specialization increases , firms often create new positions and embrace different metrics to evaluate different job functions . Rainmakers typically are viewed as the most important executives at an advisory firm , as they bring new clients in the door . But wealth advisors who provide ongoing advice and service to existing clients are largely responsible for client retention . When an outsider considers acquiring a firm today , two of the key yardsticks they use to determine its value are the organic growth and the client-retention rates .

When an outsider considers acquiring a firm today , two of the key yardsticks they use to determine its value are the organic growth and the client-retention rates .

But the profession ’ s dynamics are constantly changing , and firms ’ priorities change with it . Over the next 15 years , one of the major challenges for this business will be managing the generational wealth transfer .

Advisors who are skilled in retaining intergenerational wealth are likely to become increasingly important . So are those who can bring in next-gen clients . Firms that excel in these two areas are likely to emerge as the big winners of the next decade .

Another challenge advisory firms face is how to structure their fee schedule as they add more services to compete in an intense market . Matt Matrisian examines this issue on page 28 , observing that the increased fees some firms are charging are meant to help them keep pace with their services . Some of the big consolidators and integrators now offer tax preparation and have 50 estate planning attorneys on staff . Presumably , these giants are figuring out ways to make their services profitable .

These two articles and more can be found in Financial Advisor ’ s November issue .

Evan Simonoff

Email me at esimonoff @ famagazine . com with your opinion .

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