Revenue Cap and Advisor Compensation

The model indicates that an advisory firm can effectively serve around 100 clients, generating $300,000 in revenue. In order to avoid overspending on advisor compensation, the firm should cap advisor compensation at approximately $100,000 to $120,000 per advisor. This constraint is crucial as experienced advisors might expect higher compensation. Therefore, to retain them, firms may need to pay slightly above the cap. Through considerations of the number of clients an advisor can manage, revenue per client, advisor compensation, and financial viability, a revenue target of around $3,000 per client emerges as a practical threshold for sustainable operations.