Autumn is Americans’ favorite season, according to the research firm YouGov America, and perhaps the best times of that best season are its warm, sun-dappled afternoons.
A golden fall afternoon is perhaps an apt metaphor for the position in which wirehouses find themselves these days. In many ways, things couldn’t be better for the giant firms. They continue to deliver healthy and steady profits to their bank holding company parents; they lead in advisor productivity among advisory channels; and the prodigious level of assets they manage continues to grow.
But just as the glorious days of autumn are bittersweet because we know what’s next, the wirehouses likely face an approaching winter of their own as they become less prominent in the overall advisory business.
One hint of the future was Wells Fargo’s recent decision to no longer disclose its advisor head count. While it is true that a firm’s advisor productivity is more important than sheer head count, quarterly reports that show steadily declining advisor numbers would paint a less-than-optimistic picture of the business.
Last year, the 55,454 advisors affiliated with independent broker-dealers outnumbered the 44,297 advisors employed by wirehouses, according to Cerulli Associates, which estimated wirehouses will shed 1.5% of their advisors through 2025. While that’s better than the 3.9% headcount shrinkage projected for the indie channel, Cerulli estimates that advisor headcount at hybrid RIAs will grow by 8% through mid-decade while the number of advisors at independent RIAs will grow by 4.2%.
Since the days are long past when brand recognition, technology and access to initial public offerings and other investment products were the trump cards of the wirehouses, their absence — and the steady advisor attrition — makes it easy to believe that winter is just around the corner for industry’s biggest names. But that’s unlikely.
First, wirehouses have figured out how to keep top-performing advisors: Compensate them well and leave them alone to bring in assets, cement clients to the firm and behave responsibly. By working in teams, the top advisors also are training those who will succeed them.
Second, most wirehouse clients aren’t going anywhere. Given that wirehouse advisors tend to be veterans of the business, it’s safe to assume that a significant percentage of the customer base consists of long-time, satisfied clients. Merrill Edge and Morgan Stanley’s institutional retirement business continue to supply the traditional advice business with countless leads. No doubt Citibank saw the potential in developing a robust feeder mechanism when it recently lured Andrew Sieg away from Merrill Lynch to head its wealth management arm.
And don’t forget inertia. When a client’s bank accounts, mortgage, credit cards and car loans are all tied together with investments, it’s too much to unravel it all and move. Yes, winter is eventually coming, but the sun is still a long way from setting on the wirehouses’ golden autumn.
[Topic: Wirehouse firm news]
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.