Why Billing Is Now a Growth Lever in Wealth & Asset Management
For years, growth in wealth management, asset management, and asset servicing has been framed as a battle for AUM, advisor productivity, and distribution. Those levers still matter. But in 2025, the most underleveraged driver of margin, trust, and enterprise value may be the least glamorous: your billing and revenue operations. If you’re a Head of Wealth, COO, CFO, or Chief Growth Officer, billing can no longer live in operational shadows. How you calculate, explain, and collect fees is now a board-level mandate—one that influences valuation in M&A, regulator posture, advisor retention, and client loyalty. What your invoice is really signalling Every statement you send is a test of operational integrity and value articulation. Clean, transparent bills tell clients “we have our house in order.” Sloppy, opaque, or error-prone bills do the opposite—and buyers see the same signal in diligence. Acquirers scrutinize revenue quality, fee policies, and the auditable trail behind them; weak revenue controls translate directly into price chips or deal risk (see diligence primers from Diligent and Grant Thornton). At the same time, fee compression keeps ratcheting down the price investors will pay, even as they expect more service—documented by Cerulli and long-running research on pricing pressure from BCG. When your pricing power is under pressure, the only way to defend margin is to eliminate leakage, differentiate with transparency, and prove the value inside your fee. The complexity tax is crushing legacy processes The industry remains anchored in fee-based models—more than 70% of advisors today are primarily fee-compensated (Cerulli; PLANADVISER; additional context via Kitces). Firms are also expanding into hybrid models. The most common approaches blend AUM-based pricing with retainers, various flat fees (for financial planning and administration), and subscription services. Minimum relationship fees are also gaining traction, while more niche structures like performance fees add another layer of complexity. Commercially agile? Yes. Operationally brutal for spreadsheets and brittle billing rules? Also yes. Breakpoints, householding, UMA/SMA nuances, negotiated carve-outs—each exception creates new failure points. Regulators know it. The SEC has documented fee-calculation deficiencies across RIAs—e.g., failing to apply tiered breakpoints or using stale asset values—resulting in direct client harm (SEC Risk Alert). Enforcement has accelerated: the SEC announced record action volume in Q1 FY2025 (press release), and FINRA’s disciplinary reports show a parallel story on supervisory gaps that drive inappropriate costs to clients (July 2025; February 2025). Legal analysts are flagging the same trend (Skadden update). The silent P&L bleed: 1–5% revenue leakage “Leakage” sounds minor; it isn’t. Industry write-ups and case analyses consistently peg the unintentional loss of 1–5% of earned revenue each year to misconfigurations, manual workarounds, and data fragmentation (HubiFi). For a $250M fee-revenue franchise, that’s $2.5M–$12.5M of mostly high-margin profit evaporating—before refunds, credits, or reputational damage. The larger your book (or the more complex your fee menu), the bigger the leak. This is why billing belongs in the growth plan, not the “cost center” bucket. Margin defense is growth when it drops to EBITDA. Why this is suddenly a C-suite (and board) problem Three forces have elevated billing from back office to boardroom: The modern billing playbook (that actually moves numbers) Executives are reframing billing as Revenue & Commerce Management—a cross-functional capability spanning finance, operations, compliance, and client experience. Here’s the pattern that wins: Future-proof the revenue engine The next decade will challenge any static billing stack: Your aim isn’t to automate yesterday’s process—it’s to build a nimble revenue chassis that lets you experiment safely with new fee models, integrate with emerging channels, and meet clients where they already are. What the board should see each quarter If billing is truly strategic, it belongs in the KPI pack. Ask for: Tie each metric to risk appetite, EBITDA targets, and client retention goals. That’s how billing earns a permanent place on the board agenda. The growth lever hiding in plain sight When fee compression squeezes the top line and competition for assets is fierce, the most controllable path to durable growth is recapturing what you already earned, preventing avoidable refunds, and turning a potential friction point into a trust amplifier. Modernizing billing isn’t an IT project. It’s a capital-allocation decision with clear line-of-sight to EBITDA, regulatory resilience, M&A valuation, and client lifetime value. Treat it like the strategic growth lever it is. Execution note: If you want a partner purpose-built for the revenue lifecycle in wealth and asset management—billing automation, advisor compensation, analytics, and transparency—PureFacts delivers end-to-end revenue optimization trusted across the industry.
From Paycheck to Power Play: Why Advisor Compensation Is Now a Strategic Growth Lever
For a Head of Wealth Management, the battle for profitability and growth has historically focused on AUM accumulation, platform expansion, and operational scale. But in 2025, one of the most strategic, yet underleveraged, drivers of growth sits closer to home: advisor compensation. In an environment of advisor scarcity, rising churn, and intense M&A scrutiny, how you compensate your advisors is no longer a back-office task. It’s a board-level priority. The Talent Cliff Is No Longer Theoretical The US Wealth Management industry is facing a structural talent cliff. Over the next decade, 110,000 advisors—38% of the workforce—are expected to retire, representing roughly 42% of AUM. Meanwhile, more than 90% of new advisors fail within three years, and only 8,000 net-new advisors entered the industry over the last decade. The result? A growing supply-demand imbalance that’s turning elite advisors into free agents, and sending recruiting costs soaring. In 2024, 35,000 advisors changed firms, with recruiting packages exceeding 100% of trailing 12-month production. A JD Power study found 34% of employee advisors and 41% of independents are considering a firm change within 24 months. Outdated Comp Models Are a Hidden Liability Many firms still rely on rigid, legacy payout structures. Advisors often shadow-account their own earnings due to errors, opacity, or misalignment. This is a reputational and financial risk, way beyond a workflow problem. For example, if 600 households that should have dropped from a 1.00% to a 0.80% fee tier remain at the higher rate, the 20-basis-point error quietly extracts $2 million-plus per year—with almost ~$900K flowing to advisor payouts and the rest directly eroding firm margin. Advisor Turnover Will Compound Replacing a single top advisor can cost 200–400% of their annual payout in recruitment fees, sign-on bonuses, and ramp time. Meanwhile, client loyalty is fragile: 90% of clients say they’d consider following a departing advisor. The compounded cost of lost assets, disrupted relationships, and the productivity dip of new advisors is significant. Firms that modernize comp to increase retention are seeing clear results. One $12B RIA introduced equity plus deferred bonuses for senior advisors and reduced voluntary attrition by 40% in 18 months—preserving an estimated $900M in AUM. Leading Firms Are Reframing Compensation Strategically According to the 2024 Schwab RIA Compensation Report, firms with performance-based comp saw 53% more net flows, 51% more revenue growth, and 43% more client growth over five years. These aren’t marginal gains. They’re proof that when compensation aligns with firm strategy, business performance accelerates. Forward-looking firms are ditching rigid payout grids and embracing platform-driven, performance-aligned compensation strategies: Regulators and Acquirers Are Both Looking Closely In 2024, the SEC issued $390M in settlements related to incentive misalignment, recordkeeping violations, and payout opacity. During M&A due diligence, opaque or overly complex comp structures raise red flags. Buyers seek predictable, scalable systems that align with enterprise growth. Firms that cannot demonstrate control and clarity in compensation are likely to face valuation discounts—or worse, deal risk. Advisor Compensation: A Board-Level KPI The firms winning talent in 2025 are treating compensation as capital allocation—not expense. Your board will expect visibility on these metrics: The Highest-Yield Investment You Haven’t Made You already know how hard it is to attract new AUM. But improving your advisor compensation system? That’s a lever that pays off immediately; through retained talent, increased trust, and recaptured margin. It’s time to treat advisor compensation as a power play. If you’re ready to reimagine your advisor compensation strategy to drive long-term talent retention and growth, reach out to PureFacts Financial Solutions. Founded in 2010, PureFacts is a global financial technology firm that powers end-to-end revenue optimization for the wealth and asset management industry. From billing automation and advisor compensation to predictive insights and compliance, our AI-powered platform helps 130+ firms manage over $15 trillion in assets — enabling them to grow with precision, transparency, and purpose. Let’s build a better way to grow together.
Revenue Leakage has become a Top Priority for CFOs in 2025
For firms in the wealth and asset management industry, the path to higher profitability has become a core strategic priority. But it’s not just about AUM growth and operational efficiency; one of the most pressing, yet often overlooked, threats to profitability is revenue leakage. Revenue leakage, the silent erosion of legitimately earned income, has been a persistent issue in many organizations – one that firms recognize but struggle to fully manage. While it rarely triggers alarms, its impact compounds over time, making it a significant threat to the profitability growth objective. With industry estimates showing up to 5% of annual revenue quietly slipping through the cracks, CFOs can no longer afford to ignore the blind spot. In an industry where fee compression is intensifying, margins are tightening, owners are looking for more revenue and regulatory scrutiny is at an all-time high, plugging these leaks with purpose-built solutions is a direct path to margin recovery and enterprise value creation. The Silent Drain on Profitability CFOs Must Address Revenue leakage in the wealth and asset management industry is not a rounding error. It is a structural issue that chips away at profitability across the revenue lifecycle: client billing, advisor compensation, and contract execution. According to EY, the typical firm is losing between 1% and 5% of earned revenue annually due to misconfigurations, data fragmentation, and manual processing failures. To put this in perspective: a firm with $50 billion in AUM and average fees of 50 basis points is generating $250 million in annual revenue. A 3% leakage rate equates to $7.5 million in lost revenue; nearly all of that hits EBITDA directly. Why? Because the cost of servicing those clients has already been incurred. Leaked revenue isn’t deferred or recoverable later, it’s high-margin income that simply vanishes. What’s Driving the Leakage? The wealth and asset management industry’s increasing complexity is a major culprit. Client demands for personalization, the proliferation of hybrid and performance-based fee models, and the rise of SMAs, UMAs, and alternative assets have pushed many legacy billing systems beyond their limits. Key leakage sources include: Billing Complexity & System Mismatches Tiered fee schedules, AUM-based breakpoints, and custom discounts are difficult to track manually. Errors occur when household assets aren’t aggregated properly, fee thresholds are misapplied, or negotiated terms aren’t enforced systematically. In some firms, even dividend payments in multi-manager UMA structures go unbilled due to software limitations. Manual Processes & Spreadsheet Dependency Despite the stakes, many firms still rely on spreadsheets to calculate and track fees. One mis-keyed digit—like billing $5,000 instead of $50,000—can repeat across billing cycles undetected, costing the firm hundreds of thousands over time. A Deloitte case study showed that in a sample of 20,000 transactions, one firm was leaking 3–4% of its revenue due to discrepancies between paper contracts and billing data. Advisor Compensation Misalignment Revenue leakage affects advisor payouts too. Complex grid-based compensation models rely on accurate billing to function properly. If client fees are calculated incorrectly, it leads to incorrect advisor commissions. The result? A double loss: leaked client revenue and erroneous payouts that require time-consuming reconciliations and risk eroding advisor trust. Contractual Blind Spots Wealth Management Agreements and Investment Policy Statements often contain bespoke clauses e.g. fee adjustments, late payment penalties, and special asset class billing, that are never activated in billing systems. Discounts meant to be temporary or conditional persist indefinitely. These “sticky discounts” and unenforced terms represent a major, recurring drain. Siloed Systems & Poor Data Hygiene Disconnected CRMs, portfolio management tools, billing engines, and accounting platforms create inconsistent data flows. A client’s household status might be updated in one system but not another, leading to fee miscalculations. In the absence of a single source of truth, leakage is inevitable. This is a CFO’s problem, not an Ops issue Historically, revenue leakage was seen as a back-office problem: a billing team inefficiency or a compliance box to check. But that view is dangerously outdated. In 2025, CFOs are being measured not only on cost control, but on the accuracy, reliability, and defensibility of revenue itself. Leakage undermines all of this: EBITDA Distortion: Every dollar leaked is a dollar off the bottom line. And since the costs have already been incurred, there’s no offset. CFOs who recover just 2% in leakage see immediate, high-margin gains. Cash Flow Risk: Delayed or incorrect billing means delayed cash inflows. This stresses liquidity, increases borrowing needs, and introduces volatility into financial planning. Forecasting Errors: If earned vs. billed revenue isn’t reconciled in real time, forecasts and budgets are built on shaky ground. Valuation Risk in M&A: Operational issues like revenue leakage uncovered during due diligence can significantly depress deal value. In some cases, these issues trigger what McKinsey refers to as a “valuation double jeopardy”: not only does the target suffer a lower EBITDA due to systemic inefficiencies, but acquirers may also assign a lower valuation multiple because of elevated perceived risk. The result? A reduced enterprise value—or worse, a failed deal. In short, revenue leakage directly undermines a CFO’s credibility with the board, investors, and auditors; it impacts the integrity of financial reporting. 2025: The Perfect Storm Several converging forces make this the moment for CFOs to act: Fee models are growing more complex as firms compete for clients with customized pricing. Regulatory bodies like the SEC are cracking down on billing discrepancies. In 2022, the SEC imposed a record $6.4 billion in fines, much of it tied to misbilling and inadequate disclosures. Margin pressure is relentless. With fee compression and rising tech and compliance costs, even a 1–2% recovery can shift a firm from break-even to profitable. Industry consolidation is accelerating. Clean, defensible revenue streams are critical to maximize value in a sale or unlock hidden upside in an acquisition. Digital transformation is risky. Billing migrations and new platform integrations often introduce fresh leaks if not governed properly. What Leading CFOs Are Doing About It Forward-thinking CFOs are reframing revenue leakage from a back-office inefficiency into a strategic lever for profitability, valuation, and
Is Your Advisor Compensation System Costing You Millions? The Hidden Impact on Your Bottom Line
In today’s competitive financial landscape, attracting and retaining top advisory talent is paramount. While a competitive, transparent, and fair compensation process is foundational to this, C-suite leaders must ask a more critical question: Is our advisor compensation framework a strategic asset, or a hidden liability impacting our end-to-end revenue management cycle? For many firms, the answer is unsettling. Makeshift spreadsheets, repurposed generic tools, or inadequately designed platforms are often struggling to manage the intricate revenue streams of the wealth management industry. If your organization relies on such improvised solutions, it could be silently hemorrhaging millions in potential revenue and creating significant operational drag. It’s time to put your current advisor compensation system under a strategic performance review. The High Stakes of Inadequate Compensation Systems The dynamism of the wealth management sector – with its diverse transaction types, evolving fee structures, frequent M&A activities, and shifting regulatory demands – necessitates an exceptionally agile and robust compensation management solution. Without it, your firm isn’t just risking inaccurate payouts; it’s risking its strategic objectives. Consider these critical blind spots that may exist within your current framework: Strategic Misalignment: Does your system truly ensure every dollar allocated to compensation directly supports your firm’s immediate priorities and long-term growth ambitions? Or could it be inadvertently incentivizing the wrong behaviors? Opacity and Inefficiency: Are calculations transparent and easily understood, fostering advisor trust? Or could complex, opaque processes be masking costly inefficiencies and discrepancies, potentially derailing your financial goals? Inflexibility in the Face of Change: Can your system seamlessly accommodate dynamic payout structures, integrate new entities post-M&A, and adapt to regulatory shifts without massive operational overhauls? Rigidity here is a direct threat to scalability and responsiveness. Industry-Specific Gaps: Is your solution truly tailored to the unique, multifaceted financial mechanics of wealth management, or is it a generic platform that fails to grasp the nuances of your revenue streams? Beyond Basic Functionality: The Data and Integration Imperative Minimizing compensation inefficiencies and maximizing profitability demands more than basic calculation capabilities. It requires sophisticated software architected for: Complex Data Mastery: Your system’s outputs are only as reliable as its data inputs and logic. It must be configurable to manage diverse incoming and outgoing billing activity, intricate fee schedules, multiple incentive tiers, and both transaction-based and flat-fee models with precision. This is merely the baseline. Seamless Ecosystem Integration: Advisor compensation doesn’t operate in a vacuum. It’s a critical component of your entire revenue lifecycle management. A truly effective solution integrates: Strategic Consulting Expertise: Applying industry best practices to architect compensation plans that drive desired outcomes. Enterprise-Grade, Purpose-Built Software: Deploying technology specifically designed for the complex variables inherent in total advisor compensation and rewards. Actionable Business Insights: Delivering detailed reports and statements that don’t just show numbers but illuminate revenue leakage, billing inefficiencies, and opportunities to optimize incentive structures for greater profitability. The Real Cost of Miscalculation: A Multi-Million Dollar Risk Consider a simple scenario: an advisor discounts a $100 service to $80. Your firm’s agreed share is 50%, or $40. An inadequately configured system might incorrectly pay the advisor $50 (50% of the original $100) and allocate only $30 to the firm. This single error directly erodes your profitability. Now, amplify this across thousands of transactions, customized incentives, complex split agreements, and performance-based payout tiers. Even minor, systemic misconfigurations can compound into substantial financial losses annually. In an industry laden with such complexities, the potential for value leakage is immense if your compensation engine isn’t meticulously engineered and managed. Transforming Compensation from an Expense to a Strategic Driver In an environment where a single basis point improvement can yield significant financial advantage, settling for a sub-optimal compensation system is an economic misstep. Legacy systems or generic solutions may offer a temporary reprieve, but they ultimately create a competitive disadvantage. By re-evaluating your compensation framework and partnering with solutions that offer deep industry insight and flexible, purpose-built technology, you move beyond merely mitigating revenue leakage. You unlock new pathways for sustainable growth, enhance advisor loyalty, and fortify your firm’s financial health. Just as an underperforming business unit demands executive attention, an underperforming compensation system warrants immediate strategic review. Is your firm ready to transform its advisor compensation from a potential liability into a strategic driver of growth? Contact us to explore how PureFacts can help optimize your revenue lifecycle. — James Iacabucci is the Director, Product & Engineering at PureFacts Financial Solutions, an award-winning provider of end-to-end revenue management solutions for the investment industry, helping firms maximize profitability, ensure compliance and deliver exceptional client service.
25 Ways Your Incentive Compensation Programs Can Be Leaking Profits from Your Wealth Management Business
Leaks are rarely a good thing, and hidden leaks are the worst kind. Homeowners know that a slowly leaking pipe or roof is about the last thing they want to discover. Car owners grow frustrated that a slow leak in a tire can be the hardest kind to fix. And you don’t have to be a boat owner to know, as Benjamin Franklin said, that “A small leak will sink a big ship.” Your financial services business may be losing revenue and profits in the same way, through a wide range of seemingly small inefficiencies, poor procedures, misalignments, and human errors in your compensation system and compensation program. These leaks are often written off as an annoyance, rather than a problem that needs immediate fixing. But over time, the leaks turn into losses and reduce your bottom line. “Watch the little things; a small leak will sink a big ship.” ~ Benjamin Franklin How Big a Problem is Revenue and Profit Leakage? Profit leakage – in this context – erupts from the unintended (or unnoticed) loss of revenue from your business and poorly optimized operations, resulting in a significant loss in overall profitability. Statistics vary, but it’s generally estimated that every company, regardless of sector, experiences addressable leakage in a range of 1 to 5 percent of EBITDA (Source: EY). In our experience, profit leakage is a considerable and often overlooked problem in the wealth management industry and has root causes that are behavioral, structural and operational in nature. Behavioral causes stem from actions that are induced, usually unintentionally, by the compensation, metrics and performance management program. Operational causes are often the result of business complexity and fragmented business processes. Finally, Structural causes relate to the design of the business model and/or the technology tools that support it and insufficient or unreliable data to fuel it. Firms may experience one, two or all these root causes, contributing to significant recurring loss in revenues and profitability if not addressed. We’ve identified the 25 ways in which your compensation system, procedures and program are likely allowing profit to leak out of your wealth management business. 25 Root Causes of Revenue and Profit Leakage Compensation Plans are not Supportive of Corporate Goals and Objectives. When compensation and reward structures are not designed, implemented and communicated to support your firm’s business strategy and performance objectives, this results in suboptimal organizational performance and therefore impairment of top-line performance is a drag on profitability. Compensation Plans are Inconsistent or Not Aligned Across Business Units. Business units that are meant to cooperate will be more successful when there is alignment of measurement and reward. Bringing multiple compensation regimes into alignment across multiple lines of business is difficult, but critical to avoiding counterproductive activities and organizational friction. Aligned measurement and compensation makes execution smoother and ensures focus is on value creating activities. Failing to Measure the Contribution of Compensation Plans. Not measuring (or inadequately measuring) the contribution of the compensation plans and programs hides profit drains. Measuring compensation program performance is typically challenged by a lack of adequate and available data or the absence of organizational accountability for compensation performance ROI. Delays in Compensation Plan Design and Rollout Compensation program changes are often needed to enhance alignment with corporate objectives, to address shifts in the market and to respond to changes in the business or team. Every day that passes between the decision to change the program and the implementation of the changes, represents leakage. It delays addressing sales and service focus issues, decreases rep/advisor satisfaction, persists operational burden and prevents all the oars pulling in one direction. Your compensation programs should be easily updated or replaced. Time-consuming requirements for custom programming or technical intervention is costly, and a warning sign that your compensation regime is not likely nimble enough to support your business. Don’t accept when the capabilities (or lack thereof) in your compensation system stand in the way of rewarding for the right customers, the right revenue, or the right performance standards. Overly Complex Compensation Plans Allowing compensation plans to become too complex ultimately results in them becoming less effective. Focused and easily understood are the key design considerations for impactful compensation programs. Complexity creates friction with the participants and that impairs their execution – exactly what you don’t want. Complex plans make it difficult to ensure that everything is correct and paid out appropriately to the right participants. The errors that spring from complex plans are themselves so complex that they can frequently only be resolved by extended research and then implementing time-consuming and costly manual adjustments. An Unruly Herd of Compensation Programs The sheer number of plans in use is not, in and of itself, a problem. However, how these plans relate and how they are managed can be a problem and can cause considerable errors and excess compensation. Plans should be easily created, named, managed, audited, understood and retired, as necessary. Poor process and oversight in plan selection, deployment and management can give rise to the wrong compensation plan or the wrong rules being deployed which results in compensation errors, reporting inaccuracies and contributes to significant leakage that can compound over time. A clean and organized user interface, logical workflow processes and efficient oversight processes mitigate many costly errors. Lack of Full Visibility and Transparency Ideally a full and completely granular view into plan set-up, input data and the calculations, is available to business leaders, managers and advisors. A lack of this visibility complicates the process of finding and reconciling errors and resolving disputes. This wastes valuable advisor, front office and operations time and erodes trust which impairs revenue and adds costs. Data Type Classification Inconsistencies Each discrete data type – especially product, service and asset/security types – must be associated to a classification that aligns with the compensation program. Frequently this means that several new products or securities may need to be assigned within the classification each day. While an automated process is desirable, many firms have workflows that include manual process that often are time consuming, have key-person