2018 was a very mixed year for the wealth management industry. Client assets fell 2.1% overall to $23.7 trillion — the largest decline in over a decade — due to the drop in the stock market, but the drop-off was uneven and the number of advisors rose less than 1%, according to a new report from Aite Group.
Wirehouses were the biggest losers and clearing and custody (and the RIAs they serve) the biggest winners of the four market segments that Aite tracked, which also included self-clearing retail brokers like Raymond James and discount and online brokers.
Wirehouses lost 5.7% in assets and about 400 brokers. Self-clearing retail brokers lost 2.2% in assets but gained about 3,000 brokers, and discount and online brokers lost 0.9% in assets but gained 150 brokers. Clearing and custody firms gained 2% in assets, and the number of advisors they serve grew by a little more than 500.
By the end of the year, advisor headcount had reached the highest level in 10 years and the breakdown of advisors looked like this:
- 205,202 served by clearing and custody firms, accounting for 60.6% of advisors
- 63,834 at self-clearing retail brokerage firms (non-wirehouses), 18.9% of advisors
- 54,030 at wirehouses, 16% of advisors
- 15,450 at discount and online brokerages, 4.6% of advisors
Aite expects advisor growth will moderate over the next several years as “technology continues to scale an advisor’s ability to manage larger books,” but an increasing number of aging investors seeking financial advice could offset some of the slower growth.
Despite these changes that Aite catalogued through year-end 2018, wirehouses were still on top for market share but now share that summit with clearing and custody firms, each with a 30.3% market share and $7.2 trillion in assets. Discount and online brokerages had a 21.5% share and $5.1 trillion in assets, and self-clearing retail brokerages an 18% market share and $4.3 trillion in assets.