Almost two-thirds of financial advisory firms in a recent Financial Planning Association survey said they planned to increase compensation in the next 12 months, and almost half of employees surveyed said they’d seen their paychecks get fatter over the previous year.
About two-thirds of firms, 66.2 percent, said they planned to increase the compensation of their employees in 12 months, according to the study, called the 2012-2013 Financial Planning Compensation Study: Compensation, Incentive and Benefit Data for Financial Planners, Technical Specialists and Support Staff. Only 0.7 percent of the firms surveyed said they planned to cut paychecks. And 48.8 percent of individual employees reported getting a raise in the previous year.
The good news also extended to hiring. Forty-three percent of the firms surveyed planned to hire additional staff in the next 12 months while only 4 percent said they would slash jobs. The biggest companies were the ones most likely to hire—some 80 percent of firms with 31 employees or more planned to add staff in the year. But even smaller firms are getting in on the action. Of those firms with six to 30 employees, 50.8 percent said they would add staff in 12 months, while 37.9 percent of firms with one to five employees said they would. Nor is two any longer a crowd for some sole practitioners, 18 percent of whom said they would be adding staff.
The study examines compensation for 21 different positions at financial advisory firms. The association said that those with the highest pay increases for the study period were compliance officers, CFO/bookkeeper/staff accountant/controllers and COO/operations managers.
Sole practitioners saw a small bump to their annual compensation. The average in the study was $98,049, a 4-percent rise over 2010’s figure of $94,125. The median salary of $80,000 has remained the same, however, for solo pilots.
There was a wide gulf between the highest and lowest CEO salaries. Those in the bottom quarter took home total pay of $140,000 or less. Those in the top quartile saw their total take home rise to $366,000 or more. Those discrepancies reflect a number of factors: Pay increases with a firm’s staff size, its total assets under management, its revenue, its total households served, and its geographic location. The highest CEO median pay was in New England while the lowest was in the mountain states.
The firm’s business model also makes a difference.
“Firms that focus primarily on investment management tend to provide higher compensation to the CEO/owener/president,” the study says.
The study makes some common-sense findings: Among sole practitioners, advisors see their compensation increase as they gain in experience and add households to their client list. Compensation also increases if they hold designations such as Certified Financial Planner (CFP) and Chartered Financial Consultant (ChFC).
Oddly, however, adding vacation days did not hurt the compensation for sole practitioners. Those taking off 14 days or fewer saw a mean compensation of $99,935, while those taking off more than 30 days in a year saw a mean compensation of $109,244. (These amounts do not include monies reinvested in the practice.)