Advisor vs Employee: Cost Information

How to think about true costs relating to a full-time employee?  The calculation is not simply an annual salary or (2,080 hrs x rate).  The following summary outlines various direct or indirect cost categories that must be added to a full-time employee's salary or wage to arrive at the "total cost" of an employee:


Insurance (Health, Dental, Vision, Life, LTD, STD, WC)

401k Retirement Plan


Sick Leave

Personal Days

Payroll Taxes - Company Paid Portion



Overhead Costs

Office Space

Phone Systems

Computer Equipment

Software Licenses

Administration Staff

Payroll Services

Interestingly enough, employees receive the overhead costs for FREE!

Other Points to Consider

1. Long-term Financial Burden:

Underperforming employees remain on payroll for weeks or months during "probation" to minimize potential for an employee initiated lawsuit.

2. Recruiting Fees For Exceptional Talent:

Avoid significant upfront fees.  Each recruiting fee paid increases the true cost of all employees.  Recruiting expenses (commissions, LinkedIn membership fees, etc) increase total overhead expenses as well.

3. Capacity of Resource Groups

Management only has so much capacity to be effective right??  By hiring more people at some point more management leadership is required.  The cost becomes exponential!

Overall, within corporate overhead, the true cost of a new hire can be double or more than salary without including benefits!!  Not only is an advisor substantially more cost effective, but also, the advisor brings independent and "fresh" perspectives to the business landscape!