In a survey of 21 different positions in financial advisory firms, a new survey from the Financial Planning Association indicates that most planners got a pay increase from the time that the was survey was conducted three years ago.
“The findings ... mirror the growth of our profession and the economy,” said Lauren M. Schadle, the FPA’s executive director and CEO.
The average sole practitioner in the survey receives annual compensation of $98,049, not including money reinvested into their practice. This is slightly more than a 4% increase compared with the $94,12 average reported in 2010.
The data was gathered from 1,000 respondents in an online survey last spring.The survey indicated that these practitioners have obtained much higher education than the average American, with 78% reporting bachelor’s degrees and 49% reporting an advanced degree. This compares to 33% and 12%, respectively, of the U.S. population of people 18 years old or older.
The FPA said its compensation survey was aimed at giving firms an industrywide look at the competitive landscape. “This report … provides a variety of metrics so you can make sure that the compensation you provide to employees (or the compensation you receive as an employee) is fair, given your firm’s size, the individual’s qualifications, and other specific metrics,” the survey authors wrote.
The survey also offered many other findings specific to sole practitioners. Among them:
- Compensation tends to increase with experience and with the number of client households served by the practice. It also increases with some certifications/designations, though the survey does not specify which marks or licenses correspond with higher incomes.
- Sole practitioners take off 26 days per year on average (including holidays, sick time and vacation time), but there is a wide variety: Some sole practitioners report no time off, while a few take more than 100 days off a year. The middle range for sole practitioners is from 15 to 29 days per year with 25% taking 14 or fewer days per year and 25% taking 30 days or more.
- Somewhat counter-intuitively, taking more vacation time does not translate to less pay.
- In addition to their compensation, most sole practitioners receive some type of benefit from their practice, although 37% reported they do not receive any additional benefits that are paid for either fully or partially by the practice. The most popular insurance benefit for sole practitioners is health insurance, with a quarter of all sole practitioners reporting that their practice either fully or partially pays for it.
- While retirement planning is a core service offered by planners to clients, most sole practitioners don’t themselves have retirement benefits that are either fully or partially funded by the practice.
- More than half of sole practitioners report that their practice pays for some educational costs, such as continuing education and licensing fees. They also cite an additional benefit: flexible work schedules.
The survey also cites results for CEOs and owners of companies, managing partners, senior financial planners and other positions.