For Advisors, 2003 Was a Better Year

The fortunes of advisors took a turn for the better in 2003, according to the annual report from the Securities Industry Association. For starters, average gross commissions and fees were up to $372,963, a 4.2 percent rise from 2002, though still lower than the $485,478 of 2000. Average earnings logged in at $153,182, up 1.6 percent from last year, and the average payout rate was 36.5 percent. We

The fortunes of advisors took a turn for the better in 2003, according to the annual report from the Securities Industry Association.

For starters, average gross commissions and fees were up to $372,963, a 4.2 percent rise from 2002, though still lower than the $485,478 of 2000. Average earnings logged in at $153,182, up 1.6 percent from last year, and the average payout rate was 36.5 percent.

“We saw a modest improvement across the board,” says Steve Carlson, SIA vice president and director of surveys. “It was the first year since 2000 that we saw an uptick in production and a downturn in turnover. The results were positive, and not entirely unexpected.”

Fee-based arrangements in 2003 accounted for 31 percent of the average rep's business, compared with 28.4 percent in 2002. In 1995, the share was around 8 percent, and the steady increases speak to the brokerage industry's continued interest in holistic advisory services.

“The upward trend in the share of a registered rep's business derived from fee-based accounts demonstrates the ways in which brokers' interests are aligned with individual investors' interests,” says Carlson.

There were also improvements in the area of broker turnover. According to the report, 19.3 percent of advisors left their firms in 2003 — an improvement from the year before when 20.8 percent did so.

The SIA report, which has been published every year since 1973, is based on interviews at 36 broker/dealers, which together employ 44,000 reps.

Payout Rate by Size of Firm
Industry average 36.5%
< 100 reps 40.1
100-700 reps 41.6
> 700 reps 35.9
Production by Years in Industry
1-3 years $144,799
4-6 years 236,795
7-9 years 343,431
10+ years 517,336
Average Broker Production by Year
1998 $430,072
1999 455,004
2000 485,478
2001 400,538
2002 357,890
2003 372,963
Turnover Rate by Size of Firm
Industry average 19.3%
< 100 reps 18.8
100-700 reps 29.9
> 700 reps 18.1
Percentage of Fee-Based Business by Size of Firm
Industry average 31%
< 100 reps 12.1
100-700 reps 18.7
> 700 reps 32.2
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