A new Cerulli report, the Cerulli Intermediary Distribution 2012 report, says market share of wirehouses is on a downward trajectory that won’t end anytime soon. From 2007 to the end of 2011, market share of the big houses fell to 41.1% from 47.8%.
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By 2014, it’s projected to fall another 6.9 points to 34.2%. The large financial institutions have been pushing to get margins to 20%. They’re honing their advisory forces to be smaller in size yet more productive.
They’re also moving away from mid-tier and mass affluent clientele. Advisors serving those clients are leaving the wirehouses in droves.
At the same time, the RIA industry is providing plenty of competition for the high end markets the wirehouses are seeking to serve. Independent broker-dealer platforms have improved to a competitive level.
Cerulli expects wirehouses to continue to lose share in both upper and lower end markets.
Regional brokerages, dually registered advisors, and RIAs stand to be the primary beneficiaries of the attrition.
That said, wirehouses still are a commanding force in the industry and asset managers feel compelled to pay the increasing costs to be included on their platforms. But that could change as consolidation continues in the RIA channel and independent platforms improve.
Those RIAs adopting an authentic family office service offering still have an advantage and will grow even more competitive