Average assets under management for financial advisors in North America hit a record $81 million last year, according to a new report.
That amount was a 9% jump from the $74 million per advisor average at the end of 2011, according to an annual report from PriceMetrix, a Toronto-based research, consulting and software solutions firm.
The report was based on PriceMetrix data from 35,000 advisors and brokers in the U.S. and Canada, and was published in PriceMetrix third annual Report on the State of Retail Wealth Management. There were no major differences between data for the U.S. and Canada, a PriceMetrix spokesman said.
Average annual revenue per advisor grew 2% in 2012 to $550,000 from $537,000 the previous year. However, average revenue on assets fell 3% -- to an average 0.69%, down from 0.72% the prior year -- as revenue growth did not keep pace with asset growth.
Equity trade volumes also continued to decline. The average advisor completed 346 equity transactions in 2012, down 10% from 386 in 2011. Average equity principal -- that is, the dollar amount of equity traded -- declined to $7.7 million last year from $8.9 million in 2011, the report found.
The continued decline in equity trade volume remains a concern across the industry, as it restrains overall revenue growth, Doug Trott, president and chief executive of PriceMetrix, said in a statement. Reducing the rate of discounting remains a challenge for advisors and their firms, as well as a significant growth opportunity.
The proportion of assets held in fee-based accounts rose to 28% from 26% at the end of 2011, according to the study. Fee-based revenue increased slightly -- to 45% of total revenue, from 43% -- and the average number of fee accounts per advisor rose from 85 to 92.
Yet the average revenue on assets on fee-based accounts declined to 1.06% last year from 1.14% in 2011. Part of the drop, according to the report, can be explained by an increase in the number of clients in large households, which typically pay a lower percent amount in fees.
CALLING FOR CONCENTRATION
The state of the retail wealth management industry remains robust, Trott said. Going forward, however, advisors need to continue to increase the value of their service by working with fewer (and wealthier) households, deepening client relationships and increasing their capacity to service their remaining clients. Advisors also need to ensure that their pricing reflects their increase in value.
The report notes that 39% of North American households have less than $50,000 in investable assets, and urges advisors to either consider dropping households that are too small or working to increase the amount of investible assets.
Another area of opportunity for advisors, according to the report, is the fact that 42% of households have only one account. That gives advisors an opening to build even deeper relationships with clients, the report said.
The PriceMetrix report follows last weeks Cerulli Associates study, which found that assets under management grew fastest in the registered investment advisor and dually registered channels.
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