4th Annual Dollars & Sense Survey: Crunching the numbers

(October 11, 2005) The average advisor took home $98,246 in personal annual income in 2004, up from $91,406 the previous year. Advisors on the IDA platform made more, averaging $124,946 annually compared to the MFDA advisors’ average personal annual income of $86,674.

Despite this, there’s been no dramatic shift of advisors moving to the IDA side — that figure remained the same as 2003 at 32%, with 58% listed as MFDA, also identical to 2003’s findings.

The number of clients advisors serve increased slightly, on average, up to 265 in 2004, from 255 the previous year. Advisors still listed prospecting as their major day-to-day challenge, slightly ahead of administration/paperwork and building book/assets.

Expenses in 2004 averaged about $41,000, mostly on overhead costs, such as administrative functions, salaries and office space. The average client had $129,652 invested with the advisors surveyed, with about one-third of advisors saying their average client has less than $50,000 invested with them. Only 1% said clients had more than $1 million invested with them. Total assets under management average $27.2 million.

At the higher end of the spectrum, advisors who reported an average book size greater than $100 million, had an average annual income of $266,495 with an average of 337 clients. Nearly 70% were registered with the IDA and 36% of their clients were self-employed.

On the product side, mutual funds remained popular, with 87% of advisors surveyed saying they either sold or recommended funds. And although 75% of advisors were also licensed to sell insurance, only 27% said it was their primary source of income. Guaranteed notes were the most popular alternative investment advisors sold in 2004, while Term Life (at 94%) was the most popular insurance product.

Here are some more top line findings from the Fourth Annual Dollars & Sense Survey

• 69% of Canadian advisors have a designation
• The CFP is the most popular designation, held by 52% of advisors
• 29% of advisors said they belonged to Advocis, the most popular industry association
• 74% of survey respondents were male, 24% were female
• Most Canadian advisors live in Ontario (39%), followed by Quebec and B.C. (both 20%).
• Most advisors (59%) are paid by commission
• 16% receive a fee/commission combination and 15% receive a salary and bonus
• 2% described themselves as fee-based, an 1% said they were fee only

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  The fourth Annual Dollars & Sense Survey was conducted among a representative sample of 2,007 of Canada’s financial advisors between July 22 and August 25, 2005. The results are considered accurate within 2.1 percentage points, 19 times out of 20.

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  More results and analysis of the fouth Annual Dollars & Sense Survey can be found in the October issues of Advisor’s Edge, Objectif Conseiller, Advisor’s Edge Report and online on Advisor.ca. Click on the links below for more coverage.