RIA Compliance and Practice Management Blog

How much is the Chief Compliance Officer of an RIA Firm Compensated?

Posted by RIA in a Box

Dec 1, 2016 9:05:06 AM

As a follow up to our recent blog post looking at what asset levels registered investment adviser (RIA) firms typically reach before hiring a full-time, dedicated Chief Compliance Officer (CCO), we wanted to next address the question of "how much is the CCO of an RIA firm generally paid?" The 2014 RIA Benchmarking Study from Charles Schwab offers great insight into this question. The study contains self-reported data from 1,132 advisory firms with average assets under management (AUM) per firm of approximately $652 million. 

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Average RIA Chief Compliance Officer Compensation Ranges

The study reports the following compensation ranges for firms that employ a full time Chief Compliance Officer:

Average compensation levels for RIA CCO

RIA Chief Compliance Officers are Experienced but rarely have Firm Ownership

The benchmarking study indicates that over one-third of CCOs have more than 20 years of experience:

  • Less than 10 years: 25%
  • 10 to 20 years: 40%
  • More than 20 years: 35%

In addition, the study shows that less than one-third CCOs have an ownership stake in the RIA firm:

  • Total with ownership: 29%
    • Less than 5%: 23%
    • 5% to 24%: 53%
    • 25% to 49%: 14%
    • 50% or more: 9%

Furthermore, investment advisory firm Chief Compliance Officers do not frequently hold industry professional designations:

  • Chartered Financial Analyst (CFA): 7%
  • Certified Financial Planner (CFP): 15%
  • Certified Public Accountant: 13%

Study Indicates that RIA CCO Compensation Ranges Vary Significantly

Total cash compensation for a CCO ranges from below $82,000 to over $226,000 per year. As RIA compliance consultants, the key factors we see impact compensation are: 1) size of the firm, 2) years of experience, and 3) geography. Many large RIA firms are concentrated in high cost cities such as New York, San Francisco, Los Angeles, or Boston which can dramatically skew the compensation figures. The Chief Compliance Officer of an RIA firm with less than a few billion in AUM in lower cost cities may find it difficult to obtain compensation reaching the 50th percentile.

Furthermore, as the study confirms, it is rare to see a full-time, dedicated CCO obtain an ownership stake in a firm. In our observations, the majority of Chief Compliance Officers that have equity ownership in an RIA firm tend to be part of the original founding group of principals or "wear multiple hats" in addition to being the CCO such as directly managing client relationships or also serving as the Chief Operating Officer (COO).

Be sure to also check out: When Does an RIA Need to Hire a Dedicated Chief Compliance Officer?

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Topics: RIA Operations, RIA Compliance

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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