As a result of the financial crisis, wirehouses will need to re-strategize in order to save what’s left of their market share that’s now shifting to the independent broker/dealer and registered investment advisor segments, according to a wealth management market study released Monday.
“Our market data suggests a significant shift toward both the independent advice model and use of self-directed brokerage platforms,” says Douglas Dannemiller, senior analyst with Aite Group and co-author of the study.
In addition to experiencing severe drops in asset valuations and fee revenues since the beginning of the crisis, wealth management firms are being forced to rethink their strategic positioning in order to remain competitive, says a press release issued by Aite Group, which conducted the study. “To complicate matters, many wealth management firms are finding themselves in mergers-and-acquisitions situations and are preoccupied with large-scale integration projects. It is safe to assume that the post-crisis wealth management landscape in the United States will look nothing like it did just a few short years ago.”
Alois Pirker, research director with Aite Group and co-author of the report says the U.S. wealth management market has seen an unprecendented flow of assets and advisors between firms and industry segments within the last 15 months.
Pirker notes that while nearly all wealth management firms have seen a sharp drop in client assets, the firms that have been able to attract new advisors have replaced “a significant share” of these assets.
The wealth management firms profiled for the report, available at www.aitegroup.com, include Bank of America/Merill Lynch, Charles Schwab, Fidelity Investments, LPL Financials and Wells Fargo.
According to the Wall Street Journal, Bank of America’s Chief Executive Ken Lewis told investors last week he plans to shrink the company’s 6,100-branch network by about 10 percent.