Wirehouse Fees & Commissions: Who’s On Top? — Q2 2014

Average yearly production surpasses that of Merrill Lynch in Q2 ’14 as client assets expand

UBS overtook Merrill, whose reps had the highest fees and commissions in the first quarter. UBS overtook Merrill, whose reps had the highest fees and commissions in the first quarter.

UBS advisors in the Americas continue to improve their individual results and surpassed a key wirehouse rival when it comes to average fees and commissions per rep as of Q2’14.

“Wealth Management Americas delivered record revenues on invested assets that exceeded $1 trillion for the first time. Financial advisor productivity also reached an all-time high,” said UBS Group CEO Sergio Ermotti, on a call with shareholders on Tuesday.

However, UBS Wealth Management Americas also saw its client flows reverse course after 15 quarters of positive momentum, an indication of just how competitive the business remains.

In the period ending June 30, UBS Americas said client assets topped $1 trillion for the first time. Net new money, though, turned negative; the unit had outflows of $2.5 billion “mainly due to client withdrawals associated with seasonal income tax payments,” the company said in a report.

“The quarter's results need to be put in the context of WMA's very strong net new money track record, with nearly $60 billion of net inflows over the last 16 quarters,” Ermotti explained on the call.

On average, UBS advisors in the United States and Latin America are outproducing their wirehouse rivals. They had $1.07 million in yearly fees and commissions as of June 30 — outpacing advisors at Merrill Lynch (BAC), $1.06 million, and Morgan Stanley, $908,000.

Of course, there’s always room to grow: Merrill Lynch says that its experienced reps — who have gone through a 3.5-year training program or were hired as experienced advisors — produce some $1.34 million in yearly fees and commissions on average.   

In terms of average client assets per rep, the Merrill advisors are slightly ahead at an estimated $144.5 million. But the UBS reps are very close at $143 million.

Morgan Stanley’s advisors have about $123 million in average client assets, while those at Wells Fargo average about $92 million.   

When it comes to the total headcount of branded financial advisors, Morgan Stanley has 16,316; Wells has 15,189 (including some who work in banks); Merrill has about 13,485, while Bank of America-Merrill Lynch has a total of 15,560 reps, when those at U.S. Trust are included.

UBS Americas includes 7,119 advisors.

The unit had operating income of $1.9 billion in Q2’14 and a pretax profit of $238 million ($246 million after adjustments).

In contrast, Morgan Stanley’s wealth unit had pre-tax income of $767 million on net revenues of $3.7 billion. BofA’s wealth group reported pre-tax income of $1.15 billion on net revenues of $4.56 billion; Merrill’s sales represented $3.80 billion or about 83% of the broader group’s results, which includes the operations of U.S. Trust.

Consistent with our investor update message, we want to be the firm of choice for high net worth and ultra-high net worth clients and the financial advisor that serves them. That's why high-quality advisors will always be central to the success of this business,” Ermotti shared.

“Therefore, our focus on FA retention remains relentless, and FA recruiting will continue to be highly selective,” he added.

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Check out Wirehouse Fees & Commissions: Who's On Top? on ThinkAdvisor.

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