Advisor Exodus Continues

When the megalithic brokerage firm you work for has tarnished its image to the point of self-parody and then it merges with an even larger (and equally shamed) megalithic brokerage firm, what’s an advisor to do?  When the name brand of the firm means very little to customers and potential customers and in some instances can even be seen as detrimental, why would an advisor stay?  When the selling of firm ideas or house products ceases to be as lucrative as it used to be, why would a broker continue to sell them?

These “whys” are being answered by advisors – with their feet.  Despite a brief bout of post-crash nesting at the “stable” wirehouses amid a torrent of huge signing bonuses, the mass exodus of advisors to the independent channel has resumed.

Bloomberg is out with a fairly panoramic look at which advisors are moving and what finally pushed them to just go for it.  Advisors are leaving and with them the clients and assets are departing as well:

More than 7,300 brokers have left the four biggest full- service brokerages — Morgan Stanley Smith Barney, Merrill Lynch, Wells Fargo Advisors and UBS Wealth Management Americas – – from the beginning of 2009 through June, according to financial services research firm Aite Group LLC in Boston and company filings.

The big banks, which count on their brokerages to generate a steady stream of fees, are losing assets as well as brokers. Assets under management at the four top brokerages dropped 16 percent to $4.75 trillion from 2007 through 2009, Aite Group says. During the same period, assets jumped almost 14 percent to $1.54 trillion at independent firms.

Technology has a lot to do with this, it’s not all about “freedom” and “payouts”.  If an independent can have the same robust “back office” and resources via an online portal offered by TD or Schwab, then the big firms are forced to make the case that it’s their “marketing” that advisors need.

This is a tough case to make in the post-credit crash world. People just aren’t very impressed with the bailout recipients no matter how many commercials they run.  And the advisors know it.


Brokers Flee Brokerages as Declining Assets Show Broken Model (Bloomberg)

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