Advisors set new records in 2010

North American advisors have enjoyed a substantial bounce back from the recession, with both asset levels and production reaching new highs by the end of 2010, according to a report from PriceMetrix.

“The general health of the retail wealth management industry is improving. In many areas it has recovered from the downturn of 2008/2009 to record performances in 2010,” the report says. “Two thirds of the performance indicators we examined show improvement during this time period. Assets are up, production is up and transactional pricing is better. Advisors are growing their fee-based business, saying ‘no’ to small households, and building more productive household relationships.”

During the downturn, average assets had dropped 8.6%, from $66.2 million in 2008 to $60.5 million in 2009. In 2010, North American advisors had seen their books recover to $71.5 million, surpassing 2008’s levels by 8%.

Advisors boosted their average gross annual production to $522,000 in 2010, topping 2008 by 7%. Return on assets held steady at 73 basis points.

Top producers managed to do even better. The top 10% of advisors grew their production from $1.124 million in 2008 to $1.243 million in 2010, a gain of 11%.

Small wonder then that advisors are focusing their practices on serving wealthier households. Small households—defined as those with less than $50,000 in assets—still make up 45% of the average advisor’s client list, but that’s down from 56% in 2008.

The average number of client households has dropped from 202 in 2008 to 193 in 2010. At the same time, the average client household now generates $2,944 per year in revenue, compared to $2,405 in 2009 and $2,453 in 2008.

While 2009 is remembered as the nadir of the market downturn, the year was not a low point in every respect. Advisors saw an increase in account opening, from an average of 14 in 2008, to 25 in 2009. That slipped to 22 new accounts in 2010.

The report also found a marked increase in the prevalence of fee-based business. The average number of fee-based accounts per advisor has grown by 43% since 2008, to 76.

Fee-based assets make up 24% of total assets, up from 19% in 2008, but the size of the average fee-based account has dwindled from $289,000 in 2008, to $255,000 in 2010.

Pricing remains a problem, as there has been a 15% decline in the number of accounts with fees in excess of 1%. In 2008, 71% of fee-based accounts charged more than 1%, but in 2010, that had fallen to 60%.

Meanwhile, transaction-based business flourished, with average annual equity trades per advisor hitting 457, a 2% increase over 2008. The average size per trade dropped 9% between 2008 and 2010, from $21,932 to $20,060. Advisors were able to make up the difference, however, but charging higher average commissions on trades—1.15% in 2010 versus 1.05% in 2008—thus the average equity ticket increased by 3% to $231, from $224.