The recession and the pressure that the RDR is putting on the industry seems to be having an impact on the salaries paid to IFAs. The latest salary survey from Hays Financial Services shows the average salary of an IFA is now £38,600, down from £45,000 the last time the survey was run three years ago.
Things look better at the upper end of the profession as the salary of a senior IFA averages out at £67,000 a year. The range of salary paid to a typical IFA covers a large spectrum, from £25,000 (just higher than the average salary of a trainee IFA) to £56,000.
The difference in average salary compared with 2008 is mainly due to a significantly lower salaries in Wales, Scotland, the North-east and the North-west. In the north of England, the average IFA salary reported is £35,000, down from £45,000 three years ago.
Informed Choice managing director Martin Bamford says the drop in basic salary could be due to a number of reasons. He says: “We have had very tough market conditions over the last few years. Those that are heavily reliant on commission will have seen a drop in income.”
IFA salaries, in common with many other industries, continue to see marked regional variations and these variations hold true no matter what section of the IFA business you look at from trainee, IFA to senior IFA.
Jobs in Greater London have the highest salaries, closely followed by the South-east, the South-west and the Midlands. Finally, the North-east and North- west of England, Scotland, Wales and Northern Ireland have the lowest average salaries.
The difference between highest salaries and lowest salaries on a regional basis is striking. Typical IFAs in London are getting paid 66 per cent more than their counterparts in Scotland, Wales or Northern Ireland.
Only at the upper end of the job market does this discrepancy start to even itself out. The average salary for senior IFAs anywhere outside London and the South-east is a standard £65,000. In the South-east, this rises slightly to £70,000, while London based senior IFAs can expect salaries in the region of £80,000.
Bamford says: “Certain parts of the country, such as the north of England and Scotland, are very reliant on the public sector – not only directly for employment but for businesses that are supp- lying the public sector. A reduction in public sector spending will have a clear impact.
“The economy is strongest in the South-east, particularly for private enterprise, and it is unsurprising that salaries reflect the higher demand for the services provided.”
The survey shows that IFAs continue to get paid significantly more than their multi-tie counterparts once they have qualified. Trainee multi-ties can expect and average salary of £24,400 (compared with £23,600 for a trainee IFA) but the national average salary for a typical multi-tied adviser is £32,100, 17 per cent less than the equivalent IFA. At senior level, this difference in even larger. A senior multi-tied adviser can expect an average salary of £43,600, compared with £67,000 for an IFA – a full 35 per cent less.
Bamford says: “We here a lot about how multi-tie is a better arrangement in a commercial sense but these figures suggest that consumers are being less attracted to the multi-tie offering.”
The salary range for paraplanners is slightly more constricted. The national average salary for a paraplanner is £25,400 ranging from £23,000 for most areas outside the south of England to £30,000 in the South-east and South-west and £33,000 in London. Again, the salary discrepancy closes for more senior positions. With a national salary of £30,300, this ranges from £28,000 in Northern Ireland, Scotland and Wales up to £36,000 in London.
The lowest-paid section of independent financial advice is mortgage brokers. The average mortgage adviser salary is £24,500. This ranges from £23,000 in Wales and the North-east to £28,000 in London.