The Art & Science of Adviser Contracts

Are you setting your advisers up to succeed—or pushing them out the door?

Attracting and retaining top talent is one of the biggest challenges in financial advice today. Our research at SJP shows that at least 1 in 2 advisers leave due to contract-related issues, and across the sector, firms are struggling to recruit and keep their best people engaged.

The core issue? Most adviser contracts are built to protect the firm, not to empower the adviser. They prioritise profitability while minimising risk, ensuring the business always wins - whether or not the adviser thrives.

But an adviser isn’t a cost to be controlled; they’re an investment to be nurtured. Too many contracts focus on limiting downside rather than unlocking potential, with rigid income splits, unrealistic validation targets, and weak incentives that all but guarantee frustration.

To build a thriving, engaged team, firms need to rethink their approach, because when advisers succeed, so does the business.

The irony? The firms that try hardest to protect themselves from adviser failure often create the exact conditions that push advisers out the door.

The best firms take a different approach. They recognise that an adviser’s early years are about learning, trust-building, and momentum. They design contracts that don’t just protect the business but actively encourage adviser success.

So, is your adviser contract setting them up for a career in your firm -or giving them a reason to leave?

Where most firms get it wrong

Too many firms unintentionally create contracts that set advisers up to fail. The most common mistakes include:

• Unclear performance metrics - Advisers need to know exactly what success looks like. Vague revenue targets, unclear progression, and a lack of long-term rewards lead to frustration and disengagement.
• Uncompetitive remuneration - If the contract isn't competitive, advisers will move elsewhere. Simple as that. In today’s war for talent, advisers will compare offers, and if they see a better deal -whether that’s in base pay, income splits, or long-term incentives, they’ll take it.
• Lack of progression - A clear career path is one of the most effective retention tools. If advisers don’t see how they can grow into senior roles, leadership positions, or business ownership, they’ll eventually look elsewhere.
• Failure to align with Consumer Duty - Contracts can’t just reward new business revenue; they need to reflect ethical conduct, client servicing, and long-term relationship building. The regulatory landscape is changing, and contracts need to evolve with it.
• Ignoring non-financial motivators - Advisers don’t just leave for more money. Autonomy, mentorship, flexibility, recognition, and even job titles all play a role in engagement and retention. The best firms build contracts that account for both financial and non-financial incentives.

What type of adviser do you really need?

A well-structured contract starts with understanding the adviser you’re hiring, and aligning their incentives with what drives their success.

If you’re bringing in a New Business Generator, their contract should be designed to fuel their drive, offering tiered splits that rise with performance in line with targets. A Client Servicer, on the other hand, performs best when incentivised for long-term relationships and client satisfaction, making a balanced salary-and-bonus model the best fit.

A Specialist Adviser, someone with deep technical expertise, will thrive on a high fee-sharing structure, with additional incentives for complex casework and referral generation. Meanwhile, an Associate Adviser, just starting their journey, needs a solid foundation -a fixed salary, structured development pathway, and a clear transition into a fee-based model as they develop confidence and build their client base.

The biggest mistake firms make is misalignment, expecting a Client Servicer to behave like a Business Generator or placing unrealistic pressure on an Associate Adviser too soon. But when contracts are built with the adviser’s natural strengths in mind, they don’t just perform better, they stay, grow, and can even become the future leaders of your business.

Structuring contracts for employed and self-employed advisers

The best contracts balance three things:

1. Economics - Is it financially sustainable for the firm and market-competitive for the adviser?
2. Motivation - Does it drive the right behaviours without unintended consequences?
3. Flexibility - Does it adapt as the adviser grows in experience and value?

Paul Harper Search produces an excellent adviser remuneration guide each year, breaking down salaries and bonus levels by region. If your contract doesn’t support an adviser to earn at market levels, it sounds obvious, but they will become a retention risk, especially in today’s competitive hiring landscape.

Employed advisers: Stability with room to grow

A strong employed contract balances stability with incentives. A competitive base salary should be tied to realistic validation targets, typically 1.5 to 2.5 times salary in total fee income with 30-60% bonus above validation. Bonus structures should reward client retention, compliance, and development, not just revenue.

The best firms provide a clear pathway for progression. Associate Advisers should have a structured route into fee-based models, while senior advisers should be incentivised through equity, leadership roles, or higher bonuses.

And don’t underestimate the power of job titles. A simple progression from Associate → Adviser → Senior Adviser helps advisers experience forward momentum, reinforcing loyalty to the firm.

The best contracts also align with Consumer Duty principles, using a Balanced Scorecard approach. Instead of just measuring revenue, firms are shifting towards multi-dimensional performance reviews using financial and behavioural metrics.

Example Balanced Scorecard

Performance Category	Metric	Weighting	Example
Fee Generation	Initial and ongoing advice fees	35%	2.5x salary in fee income
Client Retention	Satisfaction & referrals	35%	90%+ retention, 5+ referrals
Professional Development	CPD & qualifications	15%	35+ hours CPD annually
Compliance & Conduct	Ethical practice	10%	Adherence to firm and FCA standards
Cultural Contribution	Teamwork & mentorship	5%	Mentoring, training, and collaboration

 

Self-employed advisers: high earning potential with long-term security

For entrepreneurial advisers who want flexibility and control over their earnings, self-employed models can be highly attractive but only if structured correctly.

One of the biggest factors in self-employed contracts is fair income splits. Generally, self-generated business offers higher splits (70–80% to the adviser), while practice-generated business is lower (around 50%). The split should reflect the strength of your opportunity. If you provide operational support, compliance, client acquisition, and servicing opportunities, a higher firm share is justifiable. It’s why building the right infrastructure to support an adviser is so important before you recruit. 

Firms that rely purely on income splits often struggle with retention. Many now offer income underpins (guaranteed minimum payments) for 12–18 months, giving advisers time to establish themselves without financial pressure.

Another critical factor is client ownership. Advisers want clarity on:

• Who owns the clients they bring in?
• What happens if they leave?
• Can they buy their client bank?

The best firms provide clear pathways for advisers to either purchase clients or transition into business ownership, and they communicate this upfront. The best even package this in a recruitment brochure with clear milestones and OTE projections.

Long-term incentives also matter. Many firms offer buy-in options, allowing advisers to acquire equity in the business over time. Others use profit-sharing or deferred bonus structures to encourage long-term commitment. At this stage, advisers are building value, which is much harder to walk away from than simply income. Indeed, the best self-employed contracts aren’t just about income today, they provide a clear pathway for advisers to build real, sustainable wealth over time.

Long-term incentives that actually work…

Incentive	How It Works	Why It Works
Profit Share	Adviser receives a % of practice profits annually	Encourages business-minded thinking
Equity Participation/Management Buy In	Adviser buys into the business over time	Creates true ownership mentality
Deferred Bonus	Bonus payouts split over 3-5 years	Retains top talent
Client Ownership Options	Adviser earns right to buy clients at a discount	Incentivises long-term retention

 

Final thought: a parallel with the legal profession

The average age of a financial adviser in the UK today is 58. Just 7% of advisers are under 30. The industry isn’t attracting enough young talent, and contract design is at least partly to blame.

Look at how top law firms operate. Newly qualified solicitors aren’t expected to bring in new business from day one. Instead, they spend years, sometimes over a decade, learning their craft, generating fees from existing clients, under the close guidance of senior lawyers. They refine their technical skills, learn how to manage clients, and build confidence before they are ever expected to generate new clients. Law firms understand that investing in young talent isn’t a cost. It’s a necessity for long-term success.

Financial advice, however, often takes the opposite approach. Many firms hand new advisers contracts with high thresholds and income splits that favour the firm, expecting them to generate new business immediately. Instead of structured development, some advisers are left to sink or swim. And when they fail, because many will under these conditions, we lose another promising adviser, widening the UK’s advice gap.

If financial advice wants to be a high-status profession, we need to rethink contract design, especially for new advisers. That means encouraging early development, rewarding learning, and giving new advisers time to mature whilst learning from the best practitioners.

In short, a contract is not just a legal document. It’s a cultural statement. It tells advisers:

✔ What you value – Revenue? Relationships? Compliance?
✔ What you expect – Short-term production or long-term commitment?
✔ What success looks like – Clear pathways, incentives, and recognition.

Get it right, and you don’t just keep advisers. You’ll develop the next generation of leaders across our profession.