Industry Trend

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Jul 26, 2007 9:37 am

Over the past two years there have been a number of regional firms that have been absorbed by wirehouse firms and banks: A.G. Edwards, Advest, J.B. Hanauer, McDonald, Piper, & Ryan Beck.

I've heard rumors on a few others, RJ, Oppenheimer and Hilliard Lyons. What are your thoughts out there? Is the industry shrinking? It seems there are two ways to go, wirehouse or independent. Will the regionals last?

Jul 26, 2007 10:26 am

I don’t know.

Jul 26, 2007 10:34 am

The James family will sell RJ just as surely as the Edwards family sold.

Hilliard is a division of PNC, unless something has happened that I did not notice.

Oppenheimer--who cares.

There are others.  The Davidson family in the Northwest won't want to own DADCO indefinitely.

The Bucholtz family in Dallas won't want to fail to capitalize on their building Southwest Securities into what it is.

Stifel Nicolaus in St. Louis is aggressively going after AGE brokers, but the reality is the firm is too small to survive without the massive amount of capital it takes to withstand turndowns in the market.

I can't think of a wirehouse that is not constantly in play--even Merrill.  This business requires an incredible amount of capital and capital is at the banks.

It is quite possible that the business will consolidate into half a dozen mega firms--all owned by banks.

Jul 26, 2007 11:09 am

Jul 26, 2007 11:26 am

Whatever.  The question was about the regional firms, and true to form you pop up like a jack in the box and push the button that starts the "LPL is..........." nonsense.

Jul 26, 2007 12:01 pm

…sorry Joe…that was pretty good…

Jul 26, 2007 12:44 pm

Jul 26, 2007 12:51 pm


By the way- Stifel is growing nicely and has its own indy arm.  Southwest clears for numerous indy b/d's.  They both do this so that they can leverage the capital that they have invested in their business.


Where did anybody say Stifel wasn't growing?  What was said was that they won't be able to survive for long without a larger partner.

As for SWS--I am very famililar with them.  Very.

What I said about them is that the Bucholtz family will want to cash in while the firm can still demand a high multiple--Don is a senior, enior citizen and is the type of man who would want to be sure that his heirs are set for life.

Jul 26, 2007 1:20 pm

Jul 26, 2007 3:09 pm

Guys, life is too short to bicker over stupid sh*t. There were many valid points brought up and I feel the industry will continue to consolidate especially when checks with 10 zeros are being written.

According to Pershing, this is the first year that the number of independent reps outnumber wirehouse reps. There are 335 Independent BD's out there, do you think they should consolidate as well? It must be difficult to pay the bills for the smaller firms with under 500 reps, agree?

Jul 26, 2007 7:23 pm

the future is in the banks. that's why merrill bought first republic, and wachovia bought world savings. they realize that's where the money is

Jul 26, 2007 9:18 pm

there will be more consolidation to come with the big 5 (ML, UBS, MS, SB and the new WS).  At some point there will be 3 big firms with about 7-10,000 reps nationwide and almost all with CFP’s, many large teams and a full arsenal of product.

There will also be a slew of indy’s, but the push there will be more to the RIA model clearing through schwab or Fidelity. This wave will boom about 5 years from now after 1 or 2 more moves from the big wires.