In Practice July 7, 2009

Advisers Made More Money in 2009 than 2008

A recent survey found that financial advisers are moving toward fee-based service and emphasizing holistic advice more than last year.
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The survey of advisers holding the Certified Financial Planner or other designations from the College for Financial Planning also found that advisers are making more money than last year. Despite the market conditions of the last year, average earnings still rose (albeit not back to 2007 levels). Average earnings rose to $215,345, up from $195,394 in 2008. In 2007, average earnings were $283,079, according to a release of the survey results.

The survey saw a shift in the advisory industry away from commissions. More than half of respondents receive most of their compensation from fees. One-fourth (26%) are fee-only, and nearly one-third (30%) receive at least half their revenue from fees.

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The survey found that there is an increased emphasis on providing holistic advice. More than one-third (36%) of advisers’ clients are receiving comprehensive written plans. Another 46% receive modular plans, both written and unwritten.

“As people watch their retirement savings or child’s college fund shrink, they are increasingly asking advisers for solutions to help live their lives, rather than simply grow their stock investments,’ said Bing Waldert, director of Cerulli Associates, which partnered with the College of Financial Planning to conduct the survey. “That requires a more comprehensive approach with a greater emphasis on customer service and better training.’

Interpersonal skills and client referrals topped the list as key drivers of success for advisers, according to the survey. Advisers also value education more than last year: Almost half (49%) of advisers listed education as a key driver of success than (up from 38% in 2008).

The top obstacles to advisers’ jobs are clients’ reluctance to pay planning fees. As far as what keeps advisers satisfied with their careers, “helping clients improve their lives,’ solving client problems, and client interaction were reported as the top drivers.

The survey received 390 responses.

 

Data & Research July 6, 2009

BofA Now Biggest Wealth Manager

A new survey found that Bank of America Corp. (BofA) holds the title of the biggest wealth manager through the end of 2008.
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Since buying Merrill Lynch & Co., BofA overtook UBS AG for the spot, according to the study of 248 institutions by Scorpio Partnership (see “Bank of America Buys Merrill Lynch“). According to a Bloomberg report about the results, BofA managed $1.5 trillion at the end of 2008 compared with $1.39 trillion at UBS. Citigroup Inc., came in third and Wells Fargo & Co. also climbed the ranks to fourth after purchasing Wachovia Corp. (see “Wachovia Leaves Citigroup at the Altar“).

Since the end of 2008, Citigroup’s Smith Barney and Morgan Stanley merged (see “Morgan Stanley Smith Barney is Born“), which is not represented in the data.

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The wealth management industry certainly took a hit in 2008. The financial crisis caused a loss of clients assets in the wealth management industry by 16% to $14.5 trillion, Scorpio said. Wealth managers hired 6% more staff but saw an 8% loss of income.

“Assets are going down and the number of millionaires isn’t increasing,” Scorpio Managing Partner Cath Tillotson told Bloomberg. “It’s worrying that we’ll potentially see a slash-and-burn reaction once banks realize that the net new money isn’t there for them to chase.”

Here are the world’s biggest wealth managers and their assets under management, based on the 2008 data from Scorpio:

  1. Bank of America Corp.: $1,501 billion
  2. UBS AG: $1,393 billion
  3. Citigroup Inc.: $1,320 billion
  4. Wells Fargo & Co.: $1,000 billion
  5. Credit Suisse Group AG: $612 billion
  6. JPMorgan Chase & Co.: $552 billion
  7. Morgan Stanley: $522 billion
  8. HSBC Holdings Plc: $352 billion
  9. Deutsche Bank AG: $231 billion
  10. Goldman Sachs Inc.: $215 billion.

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