What You Need to Know
- Wirehouse headcount keeps falling, while reasons for the decline keep growing.
- It's easier than ever to start an independent RIA, according to industry experts.
- The cachet of big-name wirehouse firms is not what it used to be, especially among younger investors.
The number of brokers and advisors at the four wirehouses — Bank of America Merrill Lynch, Morgan Stanley, UBS and Wells Fargo — has been declining for several years and is expected to continue dropping for the foreseeable future.
While that decline doesn’t appear to be happening significantly faster now than it has been since the trend started in about 2010, after the end of the Great Recession, reps are fleeing wirehouses to start independent RIAs or join RIAs or smaller broker-dealers for an ever-growing multitude of reasons.
Morgan Stanley has stopped reporting advisor headcount, a spokesperson for the company said Thursday.
But headcounts at the other three wirehouses all declined last year.
The total combined number of Merrill and Private Bank wealth advisors fell by 7 last year to 19,373 at Merrill Lynch.
The number of UBS wealth advisors in the Americas, meanwhile, fell to 6,305 as of Dec. 31 from 6,549 a year earlier (a decline of 244 people). And the number of both financial and wealth advisors at Wells Fargo at the end of its fourth quarter stood at 13,513, versus 14,414 a year earlier. That was after the firm said in October that several hundred advisors were included in layoffs that started in August.
· Decreased emphasis on training programs and recruiting.
· Fewer acquisitions.
· Increased strength of regional broker-dealers.
· It’s easier than ever to become an independent RIA.
· A shift to RIAs as the most appealing business model.
· Too much bureaucracy and regulation.
· The growth of self-directed trading.
· A decreased need for full-service advisors and brokers.
· A lack of newcomers to replace registered reps who retire or shift channels.
· Decreased appeal among younger Americans for Wall Street in favor of the tech sector.
· Declining cachet of big-name wirehouse firms.
· It’s become harder for many reps to make a significant amount of money at wirehouses.
Andy Tasnady, managing partner of Tasnady Associates
Tasnady points to two big factors in declining wirehouse headcount: “One is the reduction of large training programs that over the years had been a source of new reps,” he says. “The second is there’s [very few] acquisitions anymore.”
Wirehouses also “took their foot off the accelerator of trying to recruit [and] paying big recruiting packages.” Wirehouses are limiting their recruiting to specific “tactical needs,” like Merrill wanting to recruit in Florida.
“The bigger factor, I think, in terms of the overall industry is just the reality that the full-service retail brokerage channel is a mature business model,” he says.
“You used to have to call your broker” to get a price quote on IBM, he recalled, with a laugh. “The access to information is now on your fingertips. The access to advice is on your fingertips also.”