Another day, another study showing that wirehouses are losing advisors and assets. According to new Cerulli report called “Advisor Migration: The Changing Landscape of Retail Distribution,” more than $800 billion in client assets will be transferred from one firm to another as a result of financial advisors switching employers this year. Of that, Wall Street wirehouse firms are expected to see a net loss of $188 billion in client assets to other channels in the industry, including RIAs, independent broker/dealers and regional b/ds.
Indeed, the wirehouses are slowly losing market share, and Cerulli projects their share of retail investor assets under management to fall to 40.7 percent in 2012 from 47 percent at the end of 2008. Meanwhile, the independent channel, which includes independent broker-dealers, registered investment advisor firms and dually-registered advisors, is expected to gain market share. The report predicts independent firms will nearly match wirehouses’ market share footprint by 2012, with 39.3 percent of retail investor assets under management.
Cerulli is quick to point out, however, that wirehouse firms still have great appeal and own a big chunk of the market. “While much attention is rightly being paid to advisors trending toward independence, we would be shortsighted to overlook the appeal more structured employee channels present to a wide segment of advisors. Often advisors like the aspirational concept of independence, but once they realize the differences between being an employee and an entrepreneur, independence doesn’t seem quite so alluring,” the report says. Wirehouses still manage around $4 trillion in retail investor assets.
But the trend is undeniable. The proportion of wirehouse advisors switching to another has fallen steadily over the past year, while the number going to independent b/ds and RIAs, as well as to regionals and institutional firms, has risen, according to data from Discovery.