The Securities Industry Association has issued new research indicating that retail brokers’ commissions rose a bit in 2003, but remained well below their highs of 2000. Rep revenues also significantly lagged the market.

In a separate report, the SIA found that cutting the maximum tax rate on dividends in the U.S. has spurred dividend growth.

The SIA says that registered representatives average gross commissions and fees increased 4.2% in 2003 to $372,963 from 2002’s $357,890 (numbers in U.S. dollars). This remains well below 2000’s peak of $485,478.

The increase in rep production was far outpaced by client account and market gains. The SIA survey found that the average value of customer assets per rep jumped from $57,898,675 in 2002 to $68,206,134 in 2003. In addition, the average value of a customer account increased 28%, from $107,663 in 2002 to $137,818 in 2003. Part of this could be explained by reps focusing on their larger clients, the SIA survey found; on average, each rep serviced 517 accounts in 2003, down from 538 in 2002.

At the same time, the Dow Jones industrial average and Nasdaq composite index both rose handily in 2003, with the Dow gaining 25% and Nasdaq gaining 50%. However, share volume on the New York Stock Exchange decreased by 3%; and, volume on Nasdaq decreased 4%.

“The upturn in RRs’ commissions and fees is modest, but reflects investors renewed interest in securities after a significant bear market,” Steve Carlson, SIA vice president and director of surveys, said in a statement. “Investors continue to take advantage of the varied choices in account types and broker relationships. The upward trend in the share of an RR’s business derived from fee-based accounts demonstrates the ways in which brokers’ interests are aligned with individual investors’ interests. These fee-based accounts have become a large part of a rep’s business and emphasize long-term relationships.”

Looking at rep revenues another way, the SIA reported that median gross commissions and fees jumped 6.1% to $279,809 in 2003 from 2002’s $263,688. But, average total earnings per rep increased by only 1.6% to $153,182 in 2003 from $150,828 in 2002. This compares with $199,804 back in 2000. Median total earnings slightly increased to $107,730 in 2003 from $102,811 in 2002. The average payout rate in 2003 was 36.5%.

The trade association’s survey also found that fee-based products now account for 31% of an RR’s commission and fees. This represents a 9.2% increase (2.6 percentage points) from the previous high of 28.4% in 2002. Just eight years ago, this share was well under 10%, it reports.

This year, SIA also collected data on reps’ production by length of service in the industry. It found that: reps with between one and three years experience generated gross revenues of $144,799 on average; reps in their fourth to sixth years averaged $236,795; reps in their seventh to ninth years averaged $343,431; and, reps in the industry at least 10 years averaged $517,336 in gross commissions and fees.

The SIA also reported that rep turnover declined slightly in 2003 – approximately one out of every five RRs (19.3%) left his or her firm. This compares to 20.8% in 2002, 19.2% in 2001, and 14.3% in 2000. Meanwhile reps’ length of service in 2003 remained roughly the same as 2002. The average professional has been in the business for 12.2 years, and with his or her current firm for 9.2 years.

The size of the average retail branch remained steady in 2003. Firms reported an average branch consisted of 13 reps and 4.6 sales assistants, while average gross commissions and fees were $5.2 million. This compares with 2002’s 12.7 reps, five sales assistants, and $4.4 million in gross commissions and fees.

Non-producing branch managers, whose compensation is typically based more on salary and bonus, earned an average of $391,618 in 2003, somewhat up from 2002’s $356,565; producing branch managers earned an average of $251,782 in 2003, also up slightly from the previous year’s $246,989. Also, trainee base salaries averaged $34,590, up from $30,807 in 2002.

The survey’s results are based on responses from 36 member-firms, which collectively employed nearly 45,000 reps and generated almost $16 billion in gross production during 2003. These firms had 2,691 branch managers and operated 2,974 branches.