Wirehouses Facing Employee Losses, Declining Market Share

Posted by adaniels in Blog on November 3, 2011

Research shows that the top four wirehouses have lost “substantial market share in both assets under management and in adviser head count over the past three years,” InvestmentNews.com reports. And the study says that things won’t be getting better any time soon.

According to research from Cerulli Associates Inc., the four wirehouses — Bank of America Merrill Lynch, Morgan Stanley Smith Barney LLC, UBS AG, and Wells Fargo Advisors – have seen their “share of retail assets under management” drop “from 49.7% in 2007 to 42.8% at the end of last year,” Investment News writes. At the same time, the number of advisers also fell from 56,901 to 50,742 during that same time period.

Scott Smith, an associate director at Cerulli, said that “the numbers reflect a combination of growth in the independent channel and an increased focus by the wirehouses on the productivity of their advisers.” Smith told Investment News he expected the four wirehouses to have at least 6,800 fewer such staff over the following five years.  The firms “could cut another 10% or more of their adviser forces,” he said.

Of those advisers, around 20% of them will leave on their own volition, and the rest “essentially will be shoved out the door,” Investment News says. And Smith notes that “the wirehouses see themselves better off with one $1 million producer than four $250,000 producers,” meaning that competition will be tougher to get the best staffers.

Written by Lisa Swan


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