Wirehouses still attracting adviser talent

Despite the growing list of options for advisers who want to break away from the wirehouses, the big four are holding their ground in the recruiting war for veteran advisers and account for the majority of the deals in the industry. Those who traded one wirehouse for another, including Bank of America Merrill Lynch, Wells Fargo Advisors, UBS Wealth Management or Morgan Stanley Wealth Management, accounted for about 60% of adviser moves last year, as tracked by InvestmentNews' Advisers on the Move database. The 60% figure is lower than it was in 2008, when an estimated 80% of advisers who moved jumped to another wirehouse, according to estimates of industry recruiter Danny Sarch of Leitner Sarch Consultants. But the number has remained relatively steady or ticked up slightly since the database began tracking moves in 2011, when 57.3% of advisers moved from wirehouse to wirehouse. And the wirehouse channel isn't giving up as many assets under management either. The amount of assets leaving wirehouses for independent firms has been falling steadily in recent years from 45.9% (of leaving advisers' books) in 2012 to 39.7% last year. Already in the first quarter this year, wirehouses have held on to 51% of the $7.9 billion of assets in motion, according to the database. “What we've seen so far this year is a lot of larger teams moving, and sometimes those teams feel that they are best accommodated by another wirehouse,” said Bill Willis, an industry recruiter who has done work with some of the wirehouse firms. “The old guys my age like the security of the wirehouse.”

The numbers in the database track only the larger moves of the industry, most of which are over $100 million, so it is not a comprehensive list of all moves. But it does reflect that wirehouses are holding onto some of the largest teams in the industry, even as independent channels increase their focus on $1 billion-plus breakaway teams and critics bemoan continual compensation changes and increased compliance hurdles. Bank of America Merrill Lynch, for example, started the quarter picking up a $1.2 billion team, including long-time Morgan Stanley veteran Bruce Munster. As of the most recent quarterly reports, the four major firms accounted for approximately $7 trillion in assets under management and about 52,000 advisers. Wirehouses have been able to keep big producers in their channel, recruiters say, because they have continued to pay big signing bonuses. “I've seen in competitive situations that they're very aggressive,” Mr. Sarch said. “The wirehouses have upped the deals somewhat, which makes it easier for [advisers] to think about the wirehouses.”

The deals for a top adviser can be more than 150% of their annual revenue. Wirehouses keep billions in recruitment and retention deals on the books, although it can take several years for those deals to pay off. In addition, while independent firms have been hoping to benefit from a wave of retiring advisers, the wirehouses have also been sweetening retirement deals for advisers, which can be persuasive to some of the older advisers making a move, Mr. Willis said. Many are looking at a “double pay day” if they move to another wirehouse and then benefit from the sunset program at that wirehouse when they retire, he added. Mr. Sarch said that independence may offer a better long-term payout given the adviser owns his or her own business, but that the move is not as seamless as joining another wirehouse. “Everyone asks about independence,” Mr. Sarch said. “But it's not for everybody.”