In 2003, an RR’s average gross commissions and fees increased 4.2 percent from 2002's $357,890 to $372,963 (but below 2000’s peak of $485,478). Median gross commissions and fees jumped 6.1 percent to $279,809 in 2003 from 2002's $263,688. Average total earnings per RR increased 1.6 percent to $153,182 in 2003 from $150,828 in 2002, but below 2000’s $199,804. Median total earnings slightly increased to $107,730 in 2003 from $102,811 in 2002.
The 31st annual survey also found that fee-based products now account for 31 percent of an RR's commission and fees. This represents a 9.2 percent increase (2.6 percentage points) from the previous high of 28.4 percent in 2002. Just eight years ago, this share was well under 10 percent.
“The upturn in RRs' commissions and fees is modest, but reflects investors renewed interest in securities after a significant bear market," said Steve Carlson, SIA vice president and director of surveys. "Investors continue to take advantage of the varied choices in account types and broker relationships. The upward trend in the share of an RR’s business derived from fee-based accounts demonstrates the ways in which brokers’ interests are aligned with individual investors’ interests. These fee-based accounts have become a large part of a rep’s business and emphasize long-term relationships.”
This year, SIA collected data on RR gross commissions and fees by length of service in the industry. For instance, RRs in their first to third years generated gross commissions and fees of $144,799 on average; RRs in their fourth to sixth years averaged $236,795; RRs in their seventh to ninth years averaged $343,431; and, RRs in the industry at least 10 years averaged $517,336 in gross commissions and fees.
The average value of a customer account increased 28 percent, from $107,663 in 2002 to $137,818 in 2003. On average, each RR serviced 517 accounts in 2003, slightly below 2002’s level of 538 accounts. The average value of customer assets per RR jumped from $57,898,675 in 2002 to $68,206,134 in 2003.
The Dow Jones Industrial Average and Nasdaq Composite Index rose during 2003, the Dow gaining 25 percent and Nasdaq gaining 50 percent. However, share volume on the New York Stock Exchange decreased by three percent; volume on Nasdaq decreased four percent.
RR turnover declined slightly in 2003 – approximately one out of every five RRs (19.3 percent) left his or her firm. This compares to 20.8 percent in 2002, 19.2 percent in 2001, and 14.3 percent in 2000.
Meanwhile an RR’s length of service in 2003 remained roughly the same as 2002. The average professional has been in the business for 12.2 years, and with his or her current firm for 9.2 years.
The size of the average retail branch remained steady in 2003. Firms reported an average branch consisted of 13 RRs and 4.6 sales assistants; average gross commissions and fees were $5.2 million. This compares with 2002's 12.7 RRs, five sales assistants, and $4.4 million in gross commissions and fees. Non-producing branch managers, whose compensation is typically based more on salary and bonus, earned an average of $391,618 in 2003, somewhat up from 2002’s $356,565; producing branch managers earned an average of $251,782 in 2003, also up slightly from the previous year’s $246,989.
SIA's comprehensive report also includes information on ticket size, trainee compensation, and training cost.
Other survey highlights include:
- The average payout rate in 2003 was 36.5 percent; and,
- Trainee base salaries averaged $34,590, up from $30,807 in 2002.
"This report is a popular benchmarking survey on the earnings and business of registered representatives, and serves as an important planning tool for member-firms,” said Carlson.
The report is available for purchase on CD-ROM. Contact Carmen Lopez, +1 212 618-0515, clopez@sia.com.