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Industry Spotlight > Wirehouse Firms

Wirehouse Advisors Are Still Proving Their Worth: Cerulli

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What You Need to Know

  • Wirehouses are losing market share, but their advisors' average AUM dwarfs that of advisors in other channels.
  • These firms have broad capacity to help their advisors address challenges like client acquisition and compliance.
  • Firms in other channels can take cues from the wirehouses on advisor retention and growth strategies.

The wirehouse channel is home to the most productive advisors in terms of assets and revenue. According to a new report from Cerulli Associates, the wirehouses — Merrill Lynch, Morgan Stanley, UBS and Wells Fargo — are averaging $198 million in assets under management per advisor, an increase of 14.4% from last year. This is compared to an average of $88.1 million across all other channels. 

The report, “U.S. Advisor Metrics 2021: Client Acquisition in the Digital Age,” notes that even though the wirehouse channel has lost 6.2 percentage points in asset market share since 2010 and is expected to lose another 6.5 percentage points by the end of 2025, they are 124% more productive than the industry average. 

The Secret to Success

The most common challenges for advisors are new client acquisition (52%), compliance (40%), and managing technology (30%). Wirehouse advisors have the upper hand with these hurdles as wirehouses are focused on equipping their advisors with technology enhancements and support services to face these challenges head on, according to Cerulli. Wirehouses have also designed internal resources, fully integrated workstations, and teams that include multiple specialists spanning global capabilities. 

The report also notes that wirehouses have prioritized various talent retention strategies, such as teaming and deferred compensation. Furthermore, they’re adjusting compensation grids to increase incentives for advisors who broaden client relationships with multiple products and services. This helps with retention as it complicates potential moves to other platforms, making client relationships less portable. 

Advice for Other Channels

For independent broker-dealers, having a corporate RIA that allows advisors to conduct fee-based business is critical, but not the sole answer to offsetting advisor interest in the benefits of hybrid RIA affiliation, the report states.

According to the research, firms that are looking to increase productivity “should focus on winning greater wallet share, advisor teaming, and merger and acquisition opportunities.” However, it warns that firms cannot lose sight of the capital required to develop infrastructure to support these efforts, as well as to recruit and retain practices working upmarket.

(Photos: Bloomberg)


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