Wire houses will continue to dominate the adviser industry for the foreseeable future, according to a report from Cerulli Associates.
Despite all the ballyhoo about the "breakaway brokers," and despite the tarnished brand names of the four wire houses, Bank of America/Merrill Lynch, Morgan Stanley Smith Barney, UBS and Wells Fargo still control 48% of adviser-managed assets in the United States, amounting to $3.9 trillion at the end of 2008, Cerulli said. Registered investment advisers ranked a distant second with 15% of the market, or $1.4 trillion.
The average wire-house adviser manages $72 million, versus just $27 million for the average adviser industrywide, the report said.
In adviser movement, the wire houses are equally dominant. The so-called breakaway brokers "make for good press," Cerulli said, but the trend does not accurately portray the industry. "There is an ongoing shift to independence, but it's not a sea change," said Scott Smith, the Cerulli analyst who wrote the report. "The wire house adviser going independent is still the exception to the rule … the [adviser] who goes from Merrill to Morgan Stanley and takes a $3 million check along the way is more the norm."
Alois Pirker, research director at Aite Group, said that the breakaway broker trend of last year has slowed significantly as the big banks' outlook improves. The "question of head count is a big one," he said, but the big companies are looking to add more advisers in the near future, which will offset the losses of the breakaway brokers.