The future seems bright for the financial advisory profession, according to the FPA 2009 Financial Planning Salary Survey. More than 1,500 individuals from 1,455 practices participated in the online survey, which was conducted from April 30-May 22, 2009. Among the good news is that 38.9% of firms say they plan to increase employee compensation in the upcoming year and 13.6% say they plan to increase or add benefits, while fewer than 6% of participants indicated they planned to decrease compensation or benefits, data which the survey says is “indicative of either positive revenue and client experiences or optimism for the economy this coming year.”
Also of good news for the owners of financial planning firms is the high degree of satisfaction that employees find in their jobs. Most respondents indicated they are highly satisfied with their jobs, with only 15% leaning toward dissatisfaction. The survey found three core drivers of employee satisfaction or dissatisfaction–the work environment, compensation, and daily tasks.
For employees who indicate they are satisfied, the work environment is the most important factor, followed by compensation and daily tasks. Those who are less satisfied identify compensation, environment/co-workers, and daily tasks as the key items that influence their lack of job satisfaction.
In addition to these self-identified drivers of satisfaction levels, the study also collected information on other drivers of satisfaction that the individual respondent may not actively recognize. These demonstrated drivers can be broken into four different categories; compensation, benefits, ownership, and job functions.
The survey found that about 60% of respondents receive a bonus and nearly 32% receive incentive pay. Interestingly, the method of compensation does not appear to have an effect on employee satisfaction. The survey notes that receiving incentive pay versus not receiving incentive pay appears to have “little to do with satisfaction.” What matters most is the level of compensation, not how it’s derived. The more money employees receive, the more likely they are to be satisfied. The survey found a direct correlation between an employee’s base salary and the level of satisfaction.
Not surprisingly, benefits also play a role in employee satisfaction, with employees more likely to be dissatisfied if they do not receive benefits, if they have access to fewer categories of benefits, and if they pay a larger percentage of their benefit costs.
Although employee satisfaction and retention are important, for most people the most interesting part of any salary survey is the section on actual salaries. On average, solo practitioners (who accounted for 13.4% of firms in the survey) receive an annual compensation of $115,266 (not including any money that is reinvested into the practice), although that figure varies by region from $74,800 in the West North Central region to $168,625 in the neighboring East North Central.
As might be expected the planners with the highest salaries fit into the managing partner/CEO/owner/president job description. For these individuals the average is $157,064 in salary, $86,370 in bonuses, and $71,855 in other compensation. The study notes that “there is a significant variance between the highest paid and the lowest paid in each area. For example, 25% of individuals in this position receive an annual salary of $90,000 or less and 25% receive $200,000 or more.” Compensation rises significantly as the number of employees and the AUM level increases.
The 157-page survey report is available free of charge to survey participants, but is also available for purchase from the FPA at a cost of $125 for members and $350 for non-members.