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Planner pay report 2017: who is earning what in advice

A New Model Adviser® survey has taken a look at adviser remuneration across metrics such as job function, experience, type of firm and gender.

Whether you have been in the profession for years or are a Next Gen planner; own your own firm or work for someone else; are an adviser, paraplanner, man or woman, pay matters. At the very least, we thought knowing how much your peers get paid would interest you.

Over two months we collected 738 responses from across the advice profession and from the length and breadth of the UK.

Responses were given anonymously, so the data is based only on what people have reported to us. But we looked at the distribution of salaries across regions, job functions, and the size of firm you work for, along with what makes up remuneration. We have also used the data to look at other questions, such as how much experience counts in determining pay, and the differences between the genders.

We will also follow this initial report with region by region breakdowns of the data, so please take a look at our headline findings and watch this space.

Whether you have been in the profession for years or are a Next Gen planner; own your own firm or work for someone else; are an adviser, paraplanner, man or woman, pay matters. At the very least, we thought knowing how much your peers get paid would interest you.

Over two months we collected 738 responses from across the advice profession and from the length and breadth of the UK.

Responses were given anonymously, so the data is based only on what people have reported to us. But we looked at the distribution of salaries across regions, job functions, and the size of firm you work for, along with what makes up remuneration. We have also used the data to look at other questions, such as how much experience counts in determining pay, and the differences between the genders.

We will also follow this initial report with region by region breakdowns of the data, so please take a look at our headline findings and watch this space.

Sample and demographics

Received wisdom has it that the average age of advisers is 53. While our survey included other job functions as well, there is a very good proportion of 40 to 49-year-olds and 30 to 39-year-olds working at advice firms as planners or paraplanners.

Our adviser category has been split between those who chose to describe themselves as advisers and those who preferred the financial planner title.

Financial planning has historically been a distinct discipline to advice, and financial planning is not itself a regulated activity. Granted, the title has become a little diluted over the years but some Institute of Financial Planning purists will say planning cannot be done without cashflow modelling, for example or might want to see planners using its six step process, for example. So we thought it made sense to include it as a separate category. 

Total remuneration

This chart shows the total remuneration of all 738 participants in the survey. This is across all ages, job functions and genders. The mode, most common, salary brackets are £30,000-£39,000 and £40,000 - £49,000. The median salary bracket, the mid-point in our data, is £70,000 – £79,000.

As you can see, however, there is a long tail of high earners. We took remuneration over £400,000 out of this chart to make it easier to illustrate the trend.

Remuneration vs experience

As shown by the upwards line in the chart above, the data supported the common sense idea that pay would increase with years of experience. But although the data confirmed the trend, it also revealed the trend to be weak.

Some with many years of experience still had lower levels of pay. Are they working part time perhaps?

Meanwhile, there are some at an early stage in their careers who are already taking home decent sums. Are they qualified to a high level, allowing them to charge top dollar for their talents? Or maybe the difference is geographical, with good opportunities in the more expensive cities for young IFAs.

Male and female

It may come as little surprise to hear that 85% of respondents to this survey were male. That is in line with numbers published by the Financial Conduct Authority, which showed that, as at the end of 2016, of the 31,812 registered individuals holding a CF1 director position at regulated firms, 4,896 were women, 26,623 were men, and 293 did not disclose their gender.

But beyond the wonky numerical split, a different divide emerged from the data. The majority of women in the profession are grouped in the lower pay brackets. What is more, women do not progress up the salary ladder in the way male advisers do. 

Are women working less long in the profession than men? Are those women working in the profession perhaps still quite young, with efforts to attract more women to advice paying off only in recent years? Or are there more fundamental barriers to high pay in advice? 

Gender vs experience

Applying the gender split seems to answer one of our questions: despite being lower paid, the female respondents in our sample were not a great deal less experienced than the males.

As the figures show, 33% of men who responded have less than 15 years experience and 41.5% of women who responded have less than 15 years experience. 

Independent vs restricted

Figures collected by the FCA last year showed ‘no material variation in charges between restricted and independent advice for retail investments’.

Our survey appears to confirm that when it comes to pay, working at an independent or restricted firm makes no difference either. Often firms that go restricted cite the high costs of being independent, whether from regulatory fees, professional indemnity insurance or research. But if that is the case, where is the saving going? Fees and charges are not lower, and now it seems like advisers' labour is not any cheaper in a restricted environment either.

Remuneration by occupation

OK, this chart gets a little complicated. But what it is showing is how pay varied between the roles respondents assigned themselves. There is some difference between advisers and financial planners, with those calling themselves financial planners seemingly a bit better off. Unsurprisingly chief executives and managing directors (some of whom no doubt give advice as well) take the biggest salaries by and large.

The strongest clustering occurs in the paraplanning space, where many respondents are in the £30,000 - £39,000 bracket, with most also in the range from £20,000 - £49,000.

Job satisfaction analysis

This chart is self-explanatory, but it becomes more interesting when we add in supplementary questions about how many hours people are working.

Respondents said they were, on average, contracted to work just under 37 hours per week.  However, when asked to estimate the hours they actually worked each week the average was 45 hours. This means average overtime was eight hours per week.

So how did this map onto how happy they felt? We found the longer hours worked, the more negative people felt about their jobs. But, interestingly, the number of people who felt very positive about their job bucked the trend, outweighing every category but the most negative.

Regional breakdown

We broke down the consolidated results across all job functions according to region. The exact regional splits correspond to the annual New Model Adviser® regional awards, which we thought made sense for the sake of consistency across what we do. We will be providing a region-by-region breakdown of pay according to job function, gender and so on over the next few days.

Comment & analysis

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