The Exodus: Starting Now – I heart Wall Street.
In 2009, in the wake of arguably one of the biggest financial crises this country has seen since the Great Depression, over 3,000 financial advisors left Merrill Lynch, UBS, Morgan Stanley and Wells Fargo to start life over at an independent broker/dealer or RIA firm, according to data provided to Registered Rep. by Meridian-IQ*, an independent research firm that used SEC data to tally results. That’s about 6 percent of the total wirehouse FA population.
And we see how that one worked out for the dinosaurs too, right?
Seriously though, while that statement is true, what they don’t bother to tell you is many of the larger teams are the ones breaking ranks, or making the move to another firm for one last check before they inevitably do breakaway.
A real-world example of the ‘too big to worry’ defense is Microsoft. And if you look at Microsoft in any two year period for the last ten years things look like business as usual — nothing to see here; nothing but slower growth or ‘normal’ attrition. But when you look at the longer timeframe as a whole, you see companies like Apple, Google, and others making some serious inroads in Microsoft’s sacred cow divisions— and these competitors have also been busy inventing new products along the way that Microsoft isn’t even competing in. Similarly, on Wall Street, I think we will continue to watch a handful of regional firms, new companies & products chip away at their market share too.
(Yours Truly) Bell left Morgan, he says, because he was tired of the firm constantly tweaking and changing the rules on products, compensation and focus and tired of apologizing for things he had nothing to do with.
Wall Street’s reign isn’t going to end with a bang. The bankers’ death will be a slow, painful, whimpering one & it’s only just beginning.
A survey from Aite Group that got 75 responses from wirehouse advisors suggests there may be about 550 top advisors at Merrill and Morgan who are currently locked in by retention packages and are more than 50 percent certain they would like to switch to an independent firm in the next 18 to 24 months. That’s about 2 percent of all financial advisors at each firm, but it represents at least 4 percent of overall revenue, according to Aite’s calculations. The biggest reason given for wanting to break away: a higher payout (22 percent). The second biggest was “uncertainty at current employer” (16 percent).
But it’s happening people, starting now. Headcount is going independent & so are the assets. Wirehouse executives may scoff at the 6% loss of headcount & say it’s normal — but they’ve also lost an even bigger 7.8% of market share since 2009. And when we’re talking trillions of dollars, every percentage point counts.
Kristen’s article is chock full of some great data points, charts & quotes from some really powerful industry people. (Oh, and there’s a couple more from me).
You really should see what’s happening on The Street. Don’t say I didn’t tell you.
Registered Rep — Indie Exodus: Overhyped?
etf’s is the next diaster for sure.