How Much Does a $1 Million Practice Actually Keep?

The short answer: On the 2026 wirehouse grids, a $1 million practice keeps roughly $440,000 to $500,000 of revenue before deferral, and a share of that is deferred four to eight years and canceled if the advisor resigns. The same practice run as an owned business nets somewhere in the 50s to 60s of revenue after real expenses, on illustrative arithmetic, and becomes an asset worth around $3.5 million at the 2025 median multiple. The four numbers that decide between them are the grid payout after deferral, the independent net after expenses, the practice's value as an asset, and the cost of the move.

Every compensation plan in wealth management is aimed at one advisor: the one producing between $750,000 and $2.5 million a year. Large enough to matter to the firm's revenue, not large enough to be courted at the top of the grid, and numerous enough that a one-point change in the band moves the firm's whole cost of compensation. When thresholds are stretched, this is the band the stretch reaches. When a small-household floor rises, this is the advisor whose book has the households under it.

So this piece runs the arithmetic for that practice, end to end. What it keeps on the grid, whether this week's 10% threshold increase reaches it, what it would net as an owned business, what it is worth as an asset, and what the transition market pays to move it. Every rate below is sourced; every step that combines them is labeled as the illustration it is. The subject throughout is the practice itself.

What the grid pays at $1 million

Start with what the firms published for 2026. Morgan Stanley reported this week that a $1 million producer kept 44% of revenue this year and a $2 million producer kept 48%, on a grid that runs from 28% to 55.5%, and that for 2027 every threshold behind those rates moves up 10%. Merrill's standard grid rates run 34% to 51%, with a reduced 20% rate on households between $250,000 and $500,000. Wells Fargo Advisors pays 50% above a monthly hurdle of $13,500, unchanged for five years, and its head called the 2026 plan the best on the Street.

Deferral is the part the payout rate hides. A share of each year's pay is set aside and vests over four to eight years depending on the firm; one wirehouse halved its deferral rates to 0.75% to 7.75% for 2026, Merrill's awards vest eight years after grant, and unvested balances are canceled on resignation, a design the Fourth Circuit upheld in April. A mid-career advisor always carries a rolling unvested balance, which is both the cost of leaving and a reason to think carefully before doing it. How each firm treats that balance on the way out is in what happens to deferred compensation when you leave.

Does the 2027 threshold increase reach you?

It reaches one kind of advisor: the one sitting within about 10% above a band edge. Multiply your current band's threshold by 1.1. If your trailing revenue is above that number, you keep your rate and the rest of this section is background. If it is below, you drop one band in January until production grows through the new edge, and on adjacent bands one to two points apart that is $10,000 to $20,000 a year on $1 million of revenue.

A $1 million producer who cleared the $1.0 million edge by $50,000 last year is under the new edge this year. A $1.3 million producer in the same band is untouched. For the advisor ten to twenty years in, the mid-career window explains why this band prices differently from either end of a career. A $2 million producer sits by definition on a threshold that just moved, which is why the 48% figure the firm quoted this week is the one most worth checking. What happens when your firm raises the payout grid has the five-minute check and the full set of options.

What the same practice nets independent

The independent channel publishes a competing bid, and it needs the same discipline. A nominal 90% payout is real and gross. Trade coverage of one large independent broker-dealer puts the realistic net in the low 70s after program fees, ticket charges, technology and E&O, before the practice pays for its office and its people.

Take that low-70s figure and, as an illustration, charge a lean office against it: rent, one or two staff, marketing and the odd consultant, call it 15 to 20 points of revenue for a $1 million practice. The advisor keeps somewhere in the 50s to 60s of revenue, so roughly $520,000 to $600,000 on $1 million. Against the $440,000 to $500,000 grid figure, that is on the order of $100,000 to $150,000 a year more, with the expenses, the compliance liability and the hiring now the advisor's own, and no one else's brand on the door.

Those are illustrative numbers and the spread narrows or widens with the practice. A book heavy in lending and banking relationships that the firm's platform made possible may not travel at 100%. A practice already run lean inside a branch, with its own staff and its own marketing, is closer to the top of the range. The arithmetic is worth doing with your figures, not these.

What the practice is worth

The number that does not appear on any grid is enterprise value. As an employee-channel practice, a $1 million book has no sale value to the advisor who built it; its exit is the firm's retire-in-place program, which pays a multiple of trailing revenue over several years and binds the successor to the firm for the duration. One such program was revised this week, to a 17-point payout bump at 30 or more years of service from 15 points at 25.

As an owned business, the same book is an asset. The median RIA transaction in 2025 priced at 11.6 times EBITDA, a record. On $1 million of revenue at an illustrative 30% margin, that is $300,000 of EBITDA and an enterprise worth around $3.5 million, sellable, borrowable against, or handed to a successor on the owner's terms. The framework buyers actually apply, and the reasons a real practice prices above or below the median, are in what is your book actually worth. The annual payout difference above is the smaller of the two numbers. This one compounds.

What the market pays to move it

The check is the third bid, and the mid-band practice sees a smaller version of it than the megateams in the headlines. Wirehouse-to-wirehouse packages ran 300% to 400% and above of trailing revenue in the first half of 2026, so $3 million to $4 million on a $1 million practice, paid as a forgivable loan over a lock-up measured in years and with a grid on the other side that will be stretched again. Independent broker-dealer deals average about 125% of revenue, so roughly $1.25 million, with ownership of the practice on the far side of the move. What a transition deal is worth in 2026 sets out the full shape.

When staying is the right answer

Often. The firm carries expenses the independent advisor has to fund from that higher payout, the brand and the banking integration win clients some practices could not win alone, the deferred balance is real money, and a sunset program is a genuine exit for an advisor who does not want to sell a business. A $1 million producer who is growing on new money clears every stretched threshold anyway and is simply being asked to keep growing, which is the job.

The four numbers are the grid payout after deferral, the independent net after real expenses, the value of the practice as an asset, and the cost of the move. Most advisors who run them stay. Staying can be the right answer. It should be an answer, not a default.

Advisors who want those four numbers run on their own practice, confidentially, are welcome to request an introduction. Every conversation is held in strict confidence.