These Cities Are the Biggest Drain on Advisor Salaries
To find out how much financial advisors really make in a variety of U.S. locations, a recent study compared the cost of living and tax burden in 126 cities with its median financial advisor salary.
New York City is a major draw for financial advisors. According to a new study from financial advice platform SmartAsset, the Big Apple has the highest concentration of advisors, with roughly 29,000 calling it home, as well as the highest median wage, at $167,850. However, when the cost of living and the tax burden are factored in, New York and many other cities fall to the bottom of the advisor salaries list.
Using age and occupation data from the Bureau of Labor Statistics for 2022, along with Q3 2022 cost of living data from the Council for Community and Economic Research, SmartAsset analyzed the cost of living, tax burden, and median financial advisor salary in 126 U.S. cities to get a better idea of just how much a financial advisor salary will actually buy these days.
New York, San Francisco, and Pittsburgh topped the list of the highest annual median salaries, with financial advisors making $167,850, $132,900, and $129,600, respectively. However, when the cost of living and city tax burden are factored in, those salaries fall to $57,986, $46,721, and $88,318.
Despite coming in second for the highest median salary at $132,900, San Francisco had the lowest adjusted salary ($46,721) out of the top 30 high-salary cities, with Boston, Detroit, Seattle, and New York rounding out the bottom locations. The median salary for each of these cities was above $100,000, but all fell below $60,000 when adjusted for cost of living and taxes.
“The financial advisor industry is projected to grow 15 percent between 2021 and 2031 — triple the average growth rate for professions,” Ray Marek, public relations manager for SmartAsset, told RIA Intel in an e-mail. “With this growing demand top of mind, SmartAsset set out to uncover which cities offer advisors the best opportunities, both in terms of highest raw salaries as well as where advisor salaries go the furthest.”
Even with the low adjusted salary, New York remained the top destination for financial advisors, followed by Miami, Boston, and San Francisco. According to the study, a high concentration of advisors in a relatively small area creates competition, which can affect salaries.
That’s not always the case, however. For example, Charlotte, North Carolina, despite having a relatively high concentration of advisors, ranked thirteenth among cities with the highest-paid financial advisors, with a median salary of $103,260, and twelfth place in adjusted salary, at $75,236.
The best opportunities to make your salary stretch, however, are in the smaller cities. Sioux Falls, South Dakota; Tulsa, Oklahoma; Utica-Rome, New York; and Reading, Pennsylvania all rank in the top five for highest median annual income adjusted for taxes and the cost of living. Nevertheless, top-performing advisors can thrive in certain larger cities despite the cost of living and taxes. Advisors in larger cities that fared relatively well in adjusted salary included Pittsburgh ($88,318), Las Vegas ($75,982), and Charlotte.
Despite the cost of living, certain locations can be a draw to advisors due to the potential for high earnings. Anchorage, Alaska; New York; and Las Vegas all ranked near the top in mean advisor wages, at $299,280, $208,250, and $207,970, respectively. SmartAsset explained that they ranked cities by median wages because it is “more reflective of an average salary. Mean salaries are more susceptible to outliers, such as exceptionally high or low salaries, which are not indicative of a true average.”