Most bookkeepers are generalists. They understand restaurants, plumbers, retail shops, but RIA firms? That’s a different animal.
If your bookkeeper doesn’t understand the realities of a registered investment advisory (RIA) firm or wealth management practice, you could end up with bad data, missed deductions, or even compliance headaches that ripple into audits or regulatory scrutiny.
Here are five advisor-specific rules every bookkeeper handling an advisory firm must know and apply.
1. Revenue Must Match Your Custodian Reports Exactly
For an advisory firm, revenue isn’t just a pile of deposits from various sources. It’s tightly tied to quarterly fee calculations from custodians like Schwab, Fidelity, or Pershing.
A bookkeeper not used to RIA businesses might miscode this revenue or treat advisor fee income like generic service income. Big mistake.
Why this matters: Your firm’s revenue records should precisely match your custodial payout reports, not estimates, not “close enough” numbers. Any difference can flag problems during audits, surprise the SEC, or create confusion when calculating KPIs like revenue per client.
Action:
- Reconcile revenue quarterly with custodial fee statements.
- Book revenue using the exact timing and amounts from custodian payouts, not just bank deposits.
2. Direct vs. Pass-Through Expenses Must Be Split Clearly
Advisory firms often have expenses that serve both the firm and individual owners, such as insurance, tech subscriptions, or even travel costs.
A generalist bookkeeper might lump these together, missing the crucial distinction between firm-operating expenses and pass-through (personal or owner benefit) expenses that should hit distributions or shareholder loans, not P&L.
Why this matters:
- Misclassification here distorts the firm’s profitability and operating margins.
- This can directly impact firm valuation (if selling) or tax deductions (if audited).
Action:
- Require detailed coding of expenses, including owner draws or personal benefits passed through the firm.
- Separate legitimate firm-level expenses from those benefiting owners personally.
3. Compensation Must Reflect Industry Structure (Not Payroll 101)
Advisory firms handle pay differently than standard small businesses. There’s typically a mix of W-2 wages for owners, guaranteed payments (for partnerships), and distributions, not just plain salary.
A generalist bookkeeper may not grasp how these fit together, or why the mix matters for tax planning and benchmarking.
Why this matters:
- Advisory firms live and die by clean owner compensation data—especially for valuation, growth benchmarking, and tax prep.
- Wrong categorization can mess up retirement plan contributions or cause IRS scrutiny on “reasonable compensation” rules for S-Corps.
Action:
- Maintain clean, separate records for W-2 wages, guaranteed payments, and equity distributions.
- Benchmark advisor pay against industry norms (FP Transitions, Schwab benchmarking reports) to ensure reasonableness.
4. Marketing, Sponsorship, and Client Event Costs Need Special Handling (With Examples)
RIAs spend on relationship-building in ways that don’t fit the generic “marketing” category your average bookkeeper knows. These costs are often partially deductible (only 50%) depending on IRS rules, not fully deductible like digital ads or print marketing.
Common Examples Bookkeepers Must Handle Properly:
Google Ads, LinkedIn Ads, Website Development – Advertising Expense (fully deductible) 100%
Client Appreciation Dinner at a Local Steakhouse – Meals & Entertainment Expense 50% deductible
Golf Outing or Sporting Event Tickets for Clients – Entertainment (non-deductible or 50% in rare cases) Often 0%
Sponsoring a local charity event with firm branding – Advertising or Marketing – (fully deductible) 100%
Hosting a Retirement Planning Seminar (with food) – Split: Food under Meals (50%), room rental under Advertising/Marketing (100%)
Employee-Only Holiday Party – Employee Benefit Expense (fully deductible) 100%
5. Custodial Fee Reimbursements and Client Credits Require Tracking
Sometimes RIAs cover trading costs, wire fees, or credit back certain charges to clients. These adjustments flow through custodial statements but rarely through the general ledger unless the bookkeeper knows to look for them.
Generalists miss these. Advisor-focused bookkeepers track them, so they match actual client reimbursements against firm expenses.
Why this matters:
- Missing these can distort margins or create a regulatory mismatch if client disclosures don’t square with books.
- SEC audits sometimes review these reimbursements for accuracy.
Action:
- Track and reconcile custodial fee reimbursements separately from standard expense lines.
- Ensure these adjustments match disclosures and client agreements.
The Bottom Line
Most bookkeepers are not trained for the nuances of advisory firms. But you can’t afford sloppy financial records or tax errors in this business.
Ask your bookkeeper:
- “Do you reconcile to custodian reports?”
- “Do you separate owner expenses from firm expenses?”
- “Do you code advisor-specific costs the right way?”
If they blink, hesitate, or deflect—it’s time to get someone who understands your world.
Because in wealth management, clean books aren’t just good practice, they protect your firm’s value, your regulatory standing, and your peace of mind.
Becker & Ledger 
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