Whatever Happened to the Stampede to Indie from the Wirehouses?

Posted by jwasserman in Blog on June 24, 2011

Whatever happened to the stampede to indie from the wirehouses?  According to an article in Registered Rep magazine, “the switch from the wirehouse model to independence will be an ongoing but slow trend. Cerulli Associates expects the wirehouse channel to lose 1 to 2 percent of its market share of assets per year.” 

So, who is going independent?  According to the survey in the Registered Rep article; the average IBD has about 19 years in the business, about $ 47 million in AUM and an average production of about $ 360,000.  The article points out that there are two types of advisors that are leaving the wirehouses and going independent.  “The first kind are advisors who are essentially encouraged to leave,” due to low production quotas.

The second type of advisor going independent is a FA with a well-established professional practice who desires to have more control of his practice.  This FA also has a sizable practice without any problems of generating any revenue.

The data from Cerulli Associates suggest that the migration to the indie side does continue, “but it’s a trickle rather than a flood.”  The wirehouses need to remain vigilant about recruitment because a trickle of water soon becomes a stream and the stream a torrent, and the torrent a flood.

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