As previously indicated, the observed revenue and expense trends indicate strong operating leverage and paint a very positive picture for advisory practice profits. Median net profit increased 19% year-overyear to $136 thousand and net profit margin increased 140 basis points to 35%. The net profit margin has rebounded to near historical highs, showing meaningful improvement from levels observed during and immediately after the financial crisis. The yearover–year change in mix of respondents by range of profits is consistent with both AUM and revenue; the lowest segment, less-than-$100,000, saw a 7-point decline to 40%, while other segments increased or were stable. It certainly appears that the key to full recovery of advisory practice margins going forward will be combination of cost-conscious operations while sustaining the level of service and performance to which clients have grown accustomed over recent years.
Next Part 6 of 6: Advisor Compensation
