Registered representatives enjoyed an uptick in their business in 2004, as 2003’s modest return of investors to the markets took on new momentum. As clients reinvested gains and refueled their accounts, SIA’s Report on Production & Earnings of Registered Representatives – 2004 shows that the average RR’s production increased 12 percent to $418,003. The average client’s portfolio increased 16.0 percent to $159,932 during the same period.
In 2004, average RR gross production increased 12.1 percent from 2003’s $372,963 to $418,003. Median gross production jumped 12.8 percent to $315,656 from $279,809 in 2003. Average total earnings per RR increased 13.7 percent to $174,105 from $153,182 in 2003. Median total earnings increased 13.2 percent to $121,577 from $107,370 in 2003.
The survey also found that fee-based products now account for 32.7 percent of average production, a slight increase from 2003’s 31 percent. Just nine years ago, this share was well under 10 percent. “The popularity of fee-based relationships continues as investors find them to be a more efficient way to manage their investments,” said Steve Carlson, SIA vice president and director of surveys. “The growth has stabilized in recent years, but they continue to appeal to the client who wants a long-term relationship with his broker and who maintains an active account.”
Further, the average value of a customer account increased 16.0 percent from $137,818 in 2003 to $159,932. On average, each RR serviced 526 accounts in 2004, an increase from 2003’s 517. The average value of customer assets per RR continued to increase steadily, from $57,898,675 in 2002 to $68,206,134 in 2003 to $73,828,017 in 2004. The Dow Jones Industrial Average and Nasdaq Composite Index rose during 2004, the Dow gaining 3.1 percent and Nasdaq gaining 8.6 percent. Share volume on the New York Stock Exchange increased by four percent; volume on Nasdaq increased seven percent.
While the average branch size remained consistent at 13.6 RRs and five sales assistants, average gross production per branch climbed 17 percent from $5.2 million to $6.08 million. RR turnover continued to decline, dropping from 19.3 percent in 2003 to 13.8 percent. This compares to 20.8 percent in 2002, 19.2 percent in 2001, and 14.3 percent in 2000. Meanwhile an RR’s length of service has remained consistent for the past three years. The average professional has been in the business for 12.6 years, and with his or her current firm for 9.4 years.
The survey’s results are based on responses from 32 member firms, which collectively employed nearly 49,000 RRs and generated more than $20 billion in gross production during 2004. These firms had 2,830 branch managers and operated 3,395 branches.