The College for Financial Planning has just published its "2006 Survey of Trends in Financial Planning" that helps answer the questions as to who's pulling in the money, how much, and what kind of client produces that income. It makes for interesting reading.
For one, it reflects the fact that the primary methods of earnings are "fee and commission" (53 percent) and "fee only" (35 percent). In looking at such earnings, the reported median gross amount of planner earnings has changed from $200,000 in 2002 to $232,995 in 2006. In fact, the fees charged this year to prepare single focus and comprehensive plans remain fairly consistent when compared to those reported just last year.
Obviously, this seems to confirm that planners remain pretty satisfied with their career choice as well as in overall satisfaction with their career in the financial planning industry.
Some of the objectives of the study were to develop an understanding of current planner income levels, compensation methods, and satisfaction with their education. The survey was administered in cooperation with Financial Planning magazine (a SourceMedia publication), which provided the list of recipients.
It is interesting to note that financial planners who hold the CFP certification have a high level (some 80 percent) of career satisfaction, a median earnings of $232,995, and most (53 percent) report fee and commission work as their primary source of earnings. The largest number (67 percent) of financial planners are 40-59 years of age and most (57 percent) have 10-24 years of experience. Incidentally, the highest mean level of earnings, as a CFP certificant was $427,937, reported by those survey participants with 20-24 years of experience.
As to the typical client, that would be a two-income couple, 55-64 years of age, with annual gross income of $100,000 to $149,000 and an annual discretionary income of $10,000 to $19,999. A majority of clients (87 percent), the survey says, expect to maintain their present lifestyle in retirement, while a lower percentage (60 percent) of financial planners expect client savings to be sufficient to maintain that standard of living.
As usual, much discussion among financial planners has to do with the method of earnings. Although, admittedly there is a movement afoot to dump "commission only" services and to move solely to "fee only," it is interesting to see that for 2006, some 53 percent have a fee and commission method, while 35 percent have only fee, and a scant 6 percent have only commission. Looking at this a little more closely, what do planners charge on an hourly basis?
According to the survey, 50 percent charge between $100-$199 an hour as the rate while 33 percent are in the $200-$299 hour rate. Approximately 33 percent of respondents stated that they did not charge an hourly rate at all.
As to plan rates, consider these: for a single-focused plan, 25 percent charge les than $100 while 16 percent charge between $500-$699 and 15 percent are at the $1,500+ mark. For a comprehensive plan, 35 percent are less than $100 while 19 percent are in the $1,000-$1,999 range, and 17 percent are in the $2,000 to $2,999 range. Some 15 percent charge at $5,000 +.
Now, is it any wonder why we are seeing an increase in financial planning? Numbers don't lie!
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