Out with the old in with the New

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Sep 28, 2008 9:33 pm

Farewell to wirehouses. How many of these FA's will stay in the biz?

How many will survive through the downturn and which firm's model will be successful?

IMHO the future model will be that of a local office with FAs also working in the capacity as Financial educators. Relationships with all banking customers, not just prospects. Yes, that does mean a salaried position with lower payouts but it may be a necessary sacrifice.




Sep 28, 2008 9:34 pm
When the dust settles I think for the only change is going to be in the names.
Sep 28, 2008 9:58 pm
IsOldSpiceRightForMe:
When the dust settles I think for the only change is going to be in the names.
 
I agree to an extent.  At least more so than this huge change with product and relationships and this and that.
 
The majority of products remain the same.  This is still a relationship driven business.  The products have been commoditized, but that happened well before this consolidation.
 
As an independent, we just changed our BD and clearing firm in August.  This meant we had to repaper all of our accounts.  Our DBA name remains the same, so it wasn't a huge change in our clients' eyes.  
 
Through this entire fiasco in the market and firms merging, being bought out, etc., we still offer the same products we always have. 
 
Things change drastically in our clients' eyes when things such as fee-based investing vs. commission, stockbrokers vs. advisors, and similar things change. 
 
I don't exactly see this situation creating situations where huge amounts of advisors leave the business completely.  Sure, some will, but not as many as people might think.
 
The banks are in an interesting position.  Banks have always viewed their clients' assets as THEIR assets.  I think more than the wirehouse did. 
 
So if banks don't treat wirehouse reps the way they want to be treated, the banks run the risk of losing the advisor.  The question becomes, do the assets go with the advisor?  Historically, yes.
 
They can't afford to lose those assets.  So I think they are in the position where they keep most wirehouse stuff as it is, but upgrade their bank advisors to the wirehouse platform.  So really, it would be the bank model (really, the old wirehouse model), indy model, and RIA model. 
Sep 28, 2008 10:10 pm

Better yet, a Jones model  

Sep 28, 2008 10:17 pm

I think you may see fewer new/new advisors coming into the business. When a Bank/BD has 25,000 advisors, I just don't see the incentive to run the old "throw sh1t against the wall" routine. With that large a force, there will be new growth strategies. I think more than anything, you will see new retention strategies. Not sure what they will be, but growth through new advisors(at the corporate level) seems fruitless. BOM's will still continue to recruit to keep their numbers where they have to be, but I just wonder how many new/new's will come into the business. After all, why have a well-financed training department when you already have 25,000 advisors (or more)??