Meanwhile, in the Land of the Lost…
- Joshua M Brown
- January 7th, 2013
Ashley Lau (Reuters) has a stat-filled State of the Brokerage Business story posted, now that 2012 is in the books.
The wirehouses finished 2012 with their grip on America's investable assets slipping even further - and their hold on the advisors who populate its ranks even more tenuous than ever.
Some interesting stats from here piece:
at least 880 veteran brokers and their teams changed firms in 2012...That included the departure of at least 16 $1 billion-plus advisers or teams, a number wealth management recruiters say they usually see over several years, not in 12 months.
[Morgan Stanley] felt the brunt of defections in 2012, with the departure of at least 243 veteran advisers who managed more than $39.2 billion. Bank of America Corp's Merrill lost at least 184 advisers who managed more than $28.5 billion.
Wells Fargo & Co's Wells Fargo Advisors and UBS Wealth Management Americas fared better in terms of recruiting and retaining...Even so, at least 82 veteran advisers departed Wells and 67 left UBS.
Signing bonuses for top advisers are now around 350 percent of the broker's annual revenue, with 180 to 200 percent offered upfront...An adviser who generates about $1 million in annual revenue might receive as much as $2 million on day one from a rival firm
These signs and developments are a horror show for the Land of the Lost - the talented advisors they are able to hang onto are demanding ever-larger paydays and bonuses to continue to put up with the "home office" rather than strike out on their own. In the meantime, the rivalries are intensifying even as the overall pie continues to shrink (last year for the first time ever, the big firms had less than half the market share of the industry).
350% signing bonuses are hilarious, by the way. Until you read the language of the agreement they come attached to.
Anyway, there is a secular trend taking place here that will not soon cease. The old school firms are finding their own "value proposition" and "brand equity" to be permanently impaired and the advantage now lies squarely with the advisors themselves.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.