Wirehouses’ Share of SMA Market Declines to 56%

New Cerulli study projects wirehouse market share will drop to 50% by 2014

 

The Managed Accounts 2010study by Cerulli Associates says that wirehouses’ share of the separately managed accounts industry, currently at 56% of the $1.9 trillion in SMA assets, is on the decline, and by 2014 will only total 50%. This, according to Cerulli analysts, is due to the growing importance of fee-based business in the SMA business.

The study, released Tuesday, also finds that fee-based managed accounts will become more important to wirehouses. However, according to the research report, much of the wirehouse channel’s future prospects for success will depend on  “the success of the integration of the pending mergers and joint ventures” between the wirehouses, along with the ability of those firms to retain and recruit advisors to the channel

This eighth annual update on managed accounts reviews the industry in light of the market downturn and recovery, looking at the SMA industry through six lenses: unified managed accounts (UMAs); separate account consultant programs; mutual fund advisory; rep as advisory; rep as portfolio manager; and ETF advisory.

Among the interesting trends: UMAs have a low adoption rate, even though most advisors have access to them. Another trend is that of regional broker-dealers gaining SMA market share since 2008 at the expense of the wirehouses. However, the Cerulli report notes that the wirehouse channel “still boasts a very large number of advisors across only a handful of firms,” controlling more than $1 trillion in managed account assets.

Even as the findings project expected increases for all channels other than wirehouses, the exception to the rule is third-party vendors (TPVs), whose growth will suffer because of tight margins and revenue growth pressure. In fact, says the study, some may not survive.

Reprints Discuss this story
This is where the comments go.