It’s common knowledge that fees charged by plan advisors are declining, especially in the mid and large markets. But overall, revenue generated by advisors on client assets is declining too. Advisors generated 68 BPs from client assets in 2013, according to a study by Price Metrix involving 40,000 advisors. This marked a continual decline from 69 BPs in 2012 and 72 BPs in 2011.
Moreover, the average fee-based account dropped from 114 BPs in 2011, to 106 BPs in 2012, and 99 BPs in 2013 — a decline of 15% in just two years. Of course, as clients have more assets, fees naturally decline. So the news may not be as bad as it seems.
But there are other alarming numbers in the Price Metrix report: Client retention rates dropped from 92% to 90% last year; and the average age of clients is climbing, meaning that younger investors may not be entering the market. Who said this business was easy?
