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September 01, 2009 at 04:00 AM
Over the past few months there has been, at least anecdotally, a rush of wirehouse brokers moving to the independent space, either as employees in big RIA firms like HighTower Advisors (see August 2009 IA cover story), as partners to existing RIA firms with the active assistance of the big custodial firms, or to the independent broker/dealer space.
Nearly every independent B/D CEO, including the four winners of the 2009 Investment Advisor Broker/Dealers of the Year interviewed in Chicago on August 10, are reporting record recruiting years, partly from the wirehouses. Other notable examples come from Baird, which said on July 30 that it had added 77 advisors representing $4.7 billion in AUM to its wealth management business in the first half of 2009, compared to 59 advisors it had hired for all of 2008.
In an interview in July, TD Ameritrade Institutional president Tom Bradley noted that while many wirehouse brokers were “still kicking the tires” on making the move to independence, he said TD was holding talks with brokers who represented $10 billion in AUM, and that it expected to welcome at least 16 such brokers in the third quarter.
In late July, the largest custodian serving registered investment advisors, Schwab Institutional’s Advisor Services, reported a 54% increase over 2008 in the number of brokerage teams that had gone independent through the first half of the year–74.
Earlier, the second-largest custodian, Fidelity Institutional Wealth Services, said that during 2008 it doubled the number of breakaway brokers, to 102, who chose Fidelity as custodian for their newly established RIA firms.
Pershing Advisor Solutions, which calls these brokers “advisors in transition,” says it has also done quite well in attracting breakaways to either the independent B/D space or to the RIA option, and it enlists current Pershing-affiliated advisors to help in the process.
A Pershing spokesman said August 16 that through the first half of 2009, 12 wirehouse teams with $1.2 billion in assets transitioned to the PAS platform, more than twice last year’s pace during the same time period. In July and midway through August, four additional breakaway broker teams have commited to the PAS platform with a combined $1.5 billion in assets.
But even those impressive numbers haven’t made a big difference in the market share enjoyed by the wirehouses, at least according to numbers compiled by Cerulli Associates. In fact, in the most recent advisor edition of its The Cerulli Edge newsletter, Cerulli argues that the trend is overstated.
