Financial advisors increased their average assets under management to record levels in 2012, according to PriceMetrix, a practice management research firm for retail brokerages in the U.S. and Canada.

Assets under management for the average advisor grew 9 percent in 2012 to $80.8 million from $74 million the year before, according to the firm's third annual Report on the State of Retail Wealth Management, which was released today.

Average annual revenue also grew two percent to $550,000 in 2012 from $537,000 in 2011.

“Financial advisors made good progress in 2012,” Doug Trott, president and CEO of PriceMetrix, said in a prepared statement. “Average revenue continued to grow while assets under management not only grew sharply, but also reversed the previous year’s decline.”

However, not all the news was good news, he said. The average revenue on assets declined 3 percent, as revenue growth did not keep pace with asset growth, according to PriceMetrix.  Financial advisors earned average revenue on assets of 0.69 percent n 2012, down from 0.72 percent in 2011.

Moreover, equity trade volumes continued to decline, with the average advisor completing 346 equity transactions in 2012, down 10 percent from 386 the year before.

“The continued decline in equity trade volume remains a concern across the industry, as it restrains overall revenue growth," Trott noted.

The shift to fee-based business continued in 2012, although at a slower pace, according to PriceMetrix. The assets held in fee-based accounts climbed from 26 percent at the end of 2011 to 28 percent at the end of 2012. Similarly, fee-based revenue increased from 43 percent to 45 percent.

PriceMetrix said the data show advisors are doing a good job of actively managing the household composition of their businesses. Advisors reduced the number of households they serve from an average of 165 to 159 while focusing on deepening relationships with their largest clients. Average household assets increased 13 percent, from $435,000 to $491,000 over the year, an important indicator of strong client relationships, according to PriceMetrix.

To further improve their business prospects, advisors should consider dropping households that are too small or work to increase the household’s investible assets, according to PriceMetrix.  They should also work to increase the number of accounts per household and should stop discounting equity trades, according tot he firm.

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