What's Behind the Wirehouse Headcount Drop?

Industry Trends 

The declining wirehouse headcounts “are partially due to the industry’s aging and shrinking sales force,” said Mark Elzweig of the recruiting firm Mark Elzweig Co., who adds that Cerulli Associates’ data shows about a third of advisors could retire over the next decade. 

In addition, the wirehouse headcount drop is a result of the exit of both UBS and Morgan Stanley from the Broker Recruiting Protocol, according to Elzweig, “and their new focus on selective upgrades to their sales force rather than broad-based new hires.”

But the latest numbers “may cause that [approach] to change,” he says.

‘Failing Model’?

The falling wirehouse headcount “is a reflection of a failing business model and shows these firms are either unable or unwilling to adjust to the marketplace,” according to Sarch.

“Every year, it looks like they are getting more rigid in their policies and procedures rather than more flexible,” he said. 

“They build bigger and bigger walls because of the drive for short-term profits,” Sarch said. “But they train advisors to focus on long-term trends and not the short term when it comes to managing client assets — what irony.” 

Meanwhile, “Cultural changes and bureaucracy are prompting more wirehouse advisors to move to regional and independent firms,” Elzweig said.

“Given that firms have an aging sales force, without an aggressive recruiting program, their headcount will shrink,” he said. “Will the increased productivity of those who remain make up for this? We will see.”