Financial advisors increased assets under management 12%, average advisor revenue rose 5%, and average household revenue increased 11% in 2013, according to PriceMetrix, a practice management software and data services company.

However, client retention rates and average revenue on assets declined in 2013, according to the firm’s fourth annual State of Retail Wealth Management report.

“Last year was a profitable year for the retail wealth management business, with assets and advisor production continuing to climb, as they have every year since 2009,” said Doug Trott, president and CEO of PriceMetrix. “It would be a mistake, however, to view this as entirely positive. Much of the growth was driven by market appreciation, and there are significant questions about client retention, pricing and an aging client population going forward.”

PriceMetrix found the average advisor managed $90.2 million in 2013, an increase from $80.8 million in 2012 and $74 million in 2011. Average advisor revenue increased to $578,000 in 2013 from $550,000 in 2012 and $537,000 in 2011. Household revenue rose to $3,670 per household from $3,300 in 2012 and $3,175 in 2011. However, the average return on assets dropped to 0.68%, down from 0.69% in 2012 and 0.72% in 2011.

The study also found that client retention deteriorated across every size of household. The average client retention rate declined from 92% in 2012 to 90% in 2013.

Among households with $1 million or more in investment assets, retention dropped from 96% in 2012 to 93% last year. For households with $250,000 or less in assets, retention declined from 92% in 2012 to 90% in 2013.

PriceMetrix found that growth came primarily from existing accounts, with fewer contributions from new clients or new advisors.

Six percent of the growth in assets came from existing accounts, 5% came from new households and 3% came from new advisors.

Departing clients, however, took a toll, reducing overall growth by 5%, says the firm. The study also revealed that clients are getting older. The average client was 60 in 2011; last year, the average age was 61.

PriceMetrix says the industry is continuing to shift to a fee-based business model. The percentage of fee-based assets increased to 31% in 2013, rising from 28% in 2012 and 26% in 2011. And almost half of advisors’ revenue was generated from fee-based business; the percentage increased from 45% in 2012 to 47% in 2013.

However, this increase in fee-based business was undercut by the continuing downward pressure on pricing, according to the study. Average fee account RoA declined to 0.99% in 2013 from 1.06% in 2012 and 1.14% in 2011.

“Advisors and their firms have a lot to consider. A key challenge, however, remains how to create, articulate and deliver a value proposition that helps to attract and keep desirable wealth management clients,” said Trott. “Another challenge is how to create a sustainable book that is not overly reliant on aging clients.”