Wirehouse Woes

The Four Remaining Wire Houses Will Succeed or Fail Based on How Well They Address These Three Things
AUG 13, 2009
So, with the joint venture of Morgan Stanley and Smith Barney legally complete, the retail brokerage world is down to four wirehouses. As a group, they face some extraordinary challenges: How do you regain customer and employee loyalty after your brand has been tarnished? Nobody I have spoken to at any level in this industry is a Monday morning quarterback claiming to have foreseen what this industry went through in 2008. All of the major firms went through a “weekend of death” whereby employees went home on Friday not sure whether they would have a place to go to work on Monday. The public wondered how it could trust an industry with its money when the industry lost billions of billions of its own capital in bad investments. Advisors and their Managers, forced to take substantial portions of their pay in stock over many years, had their own net worths crushed in the debacle. Advisors played musical chairs (I always loved that game!) as a way just to recoup their losses with up front money. Advisors and their clients will never trust or be loyal to their firms in the same way again. How do you manage so many Advisors without crushing the entrepreneurial spirit that makes the best of them so special? As business has slowed, you have enormous cost cutting measures. Every employee in the industry is being asked to do more, for less, with fewer resources. Layoffs are everywhere. In addition, you are part of highly regulated, compliance focused industry. Because of the mergers, there are fewer staff people responsible for supporting the largest salesforces that the industry has ever seen. This is not exactly a formula for entrepreneurialism. Can you keep the Advisors that pay the bills growing and happy, even as you support them less on a “staff per broker” basis? Last, but not least, is this industry prepared to transition from a Sales Culture to a Fiduciary Culture? It's coming, in some way, shape, or form. Advisors will be forced at some point soon to be true Fiduciaries for their clients and not “mere” Brokers. Are the big producers (as measured by sales) also the best performers (as measured by investment performance and/or client satisfaction)?

Latest News

'Bogged down' advisors just want to have fun (again)
'Bogged down' advisors just want to have fun (again)

Jim Cahn, of Wealth Enhancement Group, lifts the lid on his firm's partnership model, his views on RIA M&A, and the widely slept-on reason why advisors are merging into larger organizations.

Vestwell unveils new emergency savings account offering
Vestwell unveils new emergency savings account offering

The fintech firm is cementing its status in the workplace savings space with its latest ESA offering, which employers can integrate into their existing benefits package.

'Money Mimosas' and other ways to show your Valentine financial love
'Money Mimosas' and other ways to show your Valentine financial love

Wealth managers offer unique ideas for couples to grow closer emotionally and financially.

Limra research finds financial confidence on the rise among Black American workers
Limra research finds financial confidence on the rise among Black American workers

Survey findings suggest increased sense of financial security and more optimistic 2025 outlook, while highlighting employers' role in ensuring retirement readiness.

DOGE efforts sideswipe muni bonds backed by federal lease payments
DOGE efforts sideswipe muni bonds backed by federal lease payments

Falling prices for some securities within the $4 trillion state and local government debt market spotlight how the push to shrink spending is sending shockwaves across the US.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.