Bankers becoming more like brokers

In part, this can be attributed to the natural accumulation of clients. According to the current survey, the average tenure in the industry is eight years, up from slightly more than seven years in 2003, and bankers’ books have naturally grown in that time. The average banker is now serving more than 418 clients, up from about 380 last year.

But the growth goes beyond the simple accumulation of new accounts. There has also been a notable increase in the size of accounts those surveyed are running.

We asked survey participants to indicate what percentage of their books were in client accounts of different sizes. Last year, we diced up the account sizes just three ways — those with less than $50,000; accounts with between $50,000 and $500,000; and those with more than $500,000. This year, we have cut the numbers more finely.

We divided the middle category into those with less than $250,000, and those with more than $250,000. We have also added a top-end category, to catch those accounts with more than $1 million in AUM.

Perhaps surprising, we found that the $1-million-plus category now represents a healthy chunk of some bankers’ books — about 7% overall. The $500,000-$1-million range accounts for 12% of accounts, on average. Combined, this represents a big leap from the 14% of accounts that fell into the $500,000-plus category in last year’s survey.

At the opposite end of the size scale, it appears that bankers have been aggressively shedding their small accounts. This year, just 23% of the average banker’s accounts fall into the less-than-$50,000 category, down sharply from about 29% a year ago, as account managers practise the same sort of active segmentation that has been so eagerly embraced by their brokerage house brethren.

While some of the drop in assets in small accounts can be attributed to bankers dumping accounts, it also appears that there has been upward migration of those accounts with less than $50,000. Compared with last year’s Report Card, when 58% of account managers’ AUM were in the $50,000-$500,000 account range, this year about 67% of accounts now fall into that grouping (24% in the upper half of the range, 43% in the lower half).

It must be pointed out that these numbers don’t quite add up to 100%, as they represent an average of bankers’ off-the-cuff estimates of the composition of their books. That said, the numbers do reflect a trend toward bigger average account sizes at the banks and credit unions.

This fact is reflected in the handful of very large producers that we came across in our survey, some with average account sizes of more than $1 million per client. Indeed, the average AUM/client is up above the $200,000 level in this year’s survey. This compares with last year’s number of slightly less than $150,000.

If we arbitrarily divide the sample into account managers with more than $150,000 in average AUM/ client and those with less, we see that bankers are increasingly coming to resemble brokers in the gap that exists between top producers and smaller ones. Notably, the big account managers are increasingly focusing on a fewer number of quite large client accounts.

In our survey, the advisors that belong to the top end of the industry have, on average, $73.3 million in total AUM spread across just 250 clients. The average AUM/client for these bankers is an impressive $571,142.

The other side of the industry appears to be working twice as hard and producing half as much. Smaller account managers report running a stable of about 500 clients, but have an average book of only $34.7 million in AUM — just $75,785 in average AUM/client.