It’s official: 2001 stunk, with average total earnings plummeting by 17.7 percent in 2001 compared to 2000. But, on the bright side, more reps are switching to the much-extolled fee-based business model, according to a new Securities Industry Association study. As a result, commissions and fees fell, the survey found.
The share of total commissions and fees from fee-based products increased to 26.1 percent from 20.1 percent in 2000, stated the SIA’s Report on Production and Earnings of Registered Representatives for 2001. Five years ago, fee-based products accounted for less than 10 percent of reps’ production. That compares to a 17.5 percent drop to $400,538 from $485,478 in commissions.
Average total earnings dropped to $164,393 from $199,804, says the study.
Steve Carlson, SIA vice president and director of surveys, said, "The decline in broker compensation reflects what happened more broadly in 2001. It was a tough year with a slowing economy, market instability and the tragic events of September 11. It was trying for investors, and not surprisingly, RRs’ lower total earnings reflected that."
The report also found that despite declines in the Dow and Nasdaq, total share volume on the Nasdaq, New York, American and regional stock exchanges increased 10.5 percent.
The bear market was hard on brokers who had been working only one to two years. They had a turnover rate was 36.3 percent. For the industry, the overall rate was 19.2 percent.
New to the survey were average number of active accounts per rep, which was 542, and average active customer’s account value, $127,018. And the report showed the average value of total customers assets per rep to be $66,367,593. Average payout rates were 37.6 percent, and median payout was 35.3 percent.
Also of interest, non-producing branch managers’ earnings were higher at $415,379 than those who produce, at $312,812. Carlson said the numbers reflect the additional responsibilities non-producing managers have compared to producing managers, who typically oversee smaller branches.
The SIA surveyed 34 member-firms for the study.
