Large adviser teams control 80% of wirehouse asset

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Dec 19, 2009 8:55 pm

Large adviser teams at wirehouses control, on average, 80% of their firm’s assets, and about a third of the industry’s total adviser-managed assets, according to Cerulli Associates Inc.

These large teams are defined as those with $200 million or more in assets.

They represent an estimated 35% of adviser practices within the wirehouses, Cerulli said in a report released this week.

Although Cerulli predicts the wirehouses will continue to lose some market share to independents, the research firm expects the big firms to maintain a huge share of the market.

The four big wirehouse firms — Merrill Lynch & Co. Inc., Morgan Stanley Smith Barney LLC, Wells Fargo Advisors LLC and UBS Financial Services Inc. — control nearly half of all adviser-managed assets industrywide, according to Cerulli.

In 2008, the four firms lost 80 basis points of market share, as measured by assets, to independent broker-dealers, said Bing Waldert, a director of research at Cerulli.

Mr. Waldert did not have an estimate for the share loss this year, but the wirehouse firms lost about 5,000 advisers during the first half of this year, he said.

“Some of that was planned attrition—lower producers” that the firms didn’t mind losing, Mr. Waldert said.

The research firm said large wirehouse teams are less likely to move to independent channels than less productive brokers.

The reluctance to move is due to a broad product and service mix that may not be portable, outstanding upfront loans and fear of disturbing a lucrative business.