The brokerage industry is an increasingly difficult job market to break into, and an even harder one to stay around in. But for those who succeed, it continues to provide a pretty nice living, according to the SIA’s 2005 Production and Earnings Survey. While most of the survey is proprietary, the SIA shared some of the information with Registered Rep.
Frank Fernandez, the SIA’s chief economist, says each year the survey data confirm some ongoing trends in the industry. “We continue to see compression of margins, fees and ever greater competition among reps,” he says. “And while participation rates in the equity market fell off in 2005 due to a shifting emphasis towards real estate, the industry and reps did pretty well overall.”
The survey polled 26 participating firms this year, down from 32 in 2004: 10 of the firms employed fewer than 100 reps; 10 employed between 10 and 100 reps; and six employed more than 1,000 reps.
The average retail branch in 2005 employed 13.3 registered reps and 5.2 sales assistants, nearly identical to last year. Average annual production for the branch fell 9 percent, to $5,517,959 from $6,080,512 in 2004. Average gross production among reps dipped slightly for all firms in 2005, to $414,164 from $418,003 in 2004.
Nevertheless, median total earnings were up slightly, to $124,871 from $121,577 the previous year. For the top producers at firms, it was another glorious year in compensation packages as the battle for the best reps continued. Turnover increased to 16.8 percent in 2005 from 13.8 percent in 2004. Nearly 50 percent of those leaving joined a competitor. The others were dismissed for low production (18.8 percent), left the industry (11.1 percent) or left for other reasons (21.8 percent).
The survey reveals a 5 percent decrease in production among first-year reps, to $64,850 from $68,373 in 2004, but a 4 percent jump in earnings, to $65,184 from $62,205. But for inexperienced reps just starting out in the business and those struggling at the low-end of the production scale, surviving 2005 was difficult: 35 percent of reps with one year of experience left at the end of that year.
“The business is definitely getting harder and firms continue to be less forgiving with low producers and new reps,” says Fernandez.