Stop Chasing Payout: How to Model Your Real Take-Home Over 10 Years
I’ve watched a lot of advisors get hypnotized by “the payout”. I’ve also watched a lot of people go overboard being anti-payout, as a matter of principle.
And in a sense, I get it. If you’ve lived in a W-2 world, that grid feels like the whole story, but it isn’t. Payout is a headline, not your paycheck.
The single insight (what I want you to walk away with)
If you’re comparing options based on payout alone, you’re doing it with a frosted windshield.
You need to model total economics:
Admin/platform fees
Ticket charges
SMAs
Office space
The transition package
etc.
Once you have a more complete view of your real economics, it’s eye-opening to project that over 5-10 years. Oh, and factor in your growth curve. Suddenly, payout is put in its proportionate place.
Why payout alone messes with your decision-making
When advisors are coming from a W-2 environment (wirehouse, bank, regional), what hits the grid is basically yours. Very little gets discreetly carved out before it lands in your lap. Independence is structured differently.
In the independent space, you can hear “90… 92… 94… 95…” all day long. The top-line number matters, sure. It’s where you’re starting from. What matters more is what gets taken out after that number.
Here’s what I see show up as the biggest blind spots:
Admin/platform fees on advisory accounts
How you trade, and who’s paying ticket charges
Whether you use SMAs (this one surprises people)
What you’re paying for space (or whether it’s included)
All the other little line items that somehow never show up in the slide deck
This is why I tell advisors: don’t fall in love with the payout. Fall in love with the spreadsheet.
What advisors say when we project it out (and why it matters)
This is one of the most important parts of the process that I walk my clients through. When we actually extrapolate take-home over 5, 7, 10 years, most advisors are surprised in one way or another. They see something like: “Okay… maybe I can take a little less transition assistance here… because my ongoing economics are just better.”
That’s usually the moment the conversation gets real because it forces you to answer a more personal question: How do you feel about your client relationships?
If you believe your clients trust you in particular, not just the logo, then it’s easier to take a little less money up front and optimize for the long arc. And honestly, this is where I think my “bread and butter” is.
Plenty of people can help you make the first move from W-2 to independent. The harder (and more valuable) work is helping you avoid the second move two years later because you learned from the economics the hard way.
The 15-minute comparison I use (no fancy model required)
You don’t need a 40-tab spreadsheet. You need a clean view of the real trade-offs.
1) Start with “true payout” (not the marketing version)
List your revenue by type:
Advisory revenue
Brokerage revenue
Then subtract what actually applies to your book:
Admin/platform bps on advisory
Ticket charges (based on how you trade)
SMA-related costs (if applicable)
Space/office costs (if not included)
2) Add the “friction tax” (this is the one nobody prices in)
If your platform’s service is sloppy, you’ll end up hiring around it. I’ve literally heard advisors describe it as a “50/50 shot” that the back office gets the answer right. That’s insane. (It’s also expensive.)
So estimate:
How many hours per week does your team spend chasing fixes, redoing paperwork, or escalating things that should’ve been clean the first time
The headcount you’ve hired (or will hire) to “buffer” the platform
That payroll comes directly out of your take-home. Your revenue can grow… and your EBITDA can still shrink.
3) Layer transition assistance carefully (because money can hide bad math)
Transition dollars can be helpful. They can also distract you from weak ongoing economics. And there’s another piece advisors don’t always understand until they’re in the middle of a big acquisition or platform change:
Bulk transfers and negative-consent letters.
FINRA guidance generally prefers affirmative customer consent for account transfers, but it also outlines specific situations in which negative response letters may be used for bulk transfers (including certain merger/acquisition scenarios).
You don’t need to become a compliance expert. You just need to understand the practical impact: Mechanics like this can compress timelines and change leverage during transitions.
4) Project 5–10 years (and run two scenarios)
Take your “after-everything” take-home and project it out:
Base case (reasonable growth)
Flat market case (because markets do that sometimes)
If you want one clean takeaway: the best deal is the one with the strongest after-everything economics and the most control over time.
A quick note on account transfers (because it comes up constantly)
If you’re switching brokerage firms, you’ll hear “ACATS” a lot. ACATS is DTCC’s system that standardizes and automates the transfer of customer account assets from one firm (or bank) to another. Again, no need to geek out, but understanding the machinery helps you stay calm when the process gets noisy.
What to do this week (action, not motivation)
Here are the questions I’d want you to answer before you let any payout number win your attention:
What fees will you pay next quarter by bps and by dollars on your actual book?
Who is paying ticket charges across your real trading patterns?
If you took zero upfront money, where does take-home land in year three?
How many people are you hiring to solve platform friction versus serving clients?
If your new firm gets acquired, do you understand how bulk transfers and negative-consent mechanics could affect your timeline and options?
None of these are “gotcha” questions. They’re just the questions owners ask.
Close
If you remember nothing else, remember this:
The industry will always try to sell you a clean story.
Big number. Simple pitch. “Best deal.”
Just remember: you’re not building for a headline.
You’re building for a decade.