Brokers could bolt from wirehouses when economy stabilizes

The steady exodus of registered reps from wirehouses is expected to accelerate dramatically over the next 18 months, according to a report from TowerGroup. Anywhere from 7,500 to 9,000 more reps could move to independent advisory firms by the end of next year, according to the company. The Needham, Mass.-based consulting firm noted that a massive portion of this migration — which would account for 12% to 14% of the total number of wirehouse reps remaining — could take place in late 2010 when markets are likely to be less rocky. At the moment, "the markets and the economy are slowing the movement of advisers toward independence," according to Sean Cunniff, research director in the brokerage and wealth management practices at TowerGroup. "Some advisers fear that adding a change of firm may give the clients one more reason to find a new financial expert," he said. "It is likely that as financial markets stabilize and the economy lands on sounder footing, the number of advisers leaving wirehouses will increase considerably." These projected breakaway reps manage approximately $500 billion to $800 billion in client assets, TowerGroup estimated. At the beginning of this year, there were 65,000 wirehouse brokers, according to the report, a 20% decrease since 2002.