Don't Count Out The Wirehouse, Consultant Tells Fund Managers

Wednesday, April 20, 2011 05:54
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Don't Count Out The Wirehouse, Consultant Tells Fund Managers

Tags: bank of america | Merrill Lynch | Morgan Stanley | registered investment advisors | Wells Fargo

"It's a big mistake to underestimate the wirehouses," a Boston industry analyst recently said. But why is that, exactly?

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Financial Research Corporation just came out with a new white paper on the topic of "Re-Evaluting the Wirehouse Opportunity."

 

The main thrust here is that it's a mistake to view the bulge bracket firms as dinosaurs on the road to extinction.

 

In fact, author Robert Martorana argues that by focusing more on portfolio management and shifting their sales team into a more advisory role, the wirehouses are finding ways to compete with the regional brokerage firms and RIAs who've been stealing market share.

 

That's not really news. The evolution in the industry from a transactional business to a more relationship-driven business  has been going on for decades, spearheaded by the fee-only movement and other RIAs.

 

What's interesting about the way this report seems to be aimed at fund managers who might've abandoned hopes to get their product on the wirehouse shelf.

 

"The industry is evolving rapidly," Martorana says. "It's really important for asset managers to comprehend the differences and adapt accordingly."

 

Sure, open architecture approaches are great and vastly preferable to a proprietary shelf, but is the next phase in the evolution of the industry going to be about product selection? 

 

Key takeaway: independent advisors who made a wide product universe a major competitive proposition may need to find a new way to differentiate themselves.

 

 

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