With the latest earnings results, the varied strategies and performance of the remaining — and transformed — wirehouse firms are becoming clearer though not entirely consistent.
And, recruiting wars and revised retention deals are playing a very significant role, experts say.
"Deals are pretty good these days, and brokers are really paying attention," says Carri Degenhardt-Burke of Degenhardt Consulting in Jersey City, N.J. "The upfront packages are going from about 85 to 145 percent of yearly production. This is decent, and near where we were last year – though the upfront bonus went as high as 160 percent in 2009."
There are a lot of bogies in the back, meaning packages that total 165 percent to 330 percent, she explains. "For larger advisors, they always want to listen to those offering 330 percent, and this size deal increases the odds that an advisor will move to a rival firm offering that," adds Degenhardt-Burke.
Advisors might go to a regional for different reasons, including a higher payout.
The 330 percent deals are an important development, according to the recruiter. "Merrill Lynch had such packages a few years ago and then stopped offering them. Merrill is now at about 220, UBS has just raised their deal – which starts at 140 percent upfront," she notes.
Morgan Stanley Smith Barney
Morgan Stanley says its Global Wealth Management group — which includes the operations of Smith Barney — delivered net revenues of $9.4 billion in 2009 with client assets of $1.6 trillion and 18,135 global representatives as of December 31, 2009. (This represents an average of $88 million in assets per FA.)
Building on the Morgan Stanley Smith Barney merger, completed on May 31, 2009, Morgan Stanley now has roughly 10,000 more FAs than the 8,356 it had a year ago. The most recent total of 18,135 — however — is down a bit from the 18,160 that MSSB had as of September 30, 2009, and the 18,444 it had on June 30, 2009.
Trailing-12-months' revenue per advisor is now $692,000 vs. $662,000 at the end of the third quarter in 2009 and $603,000 at the end of 2008, before the merger with Smith Barney.
Morgan Stanley says that 70 percent of client assets are held by clients with over $1 million being managed by the broker-dealer. Fee-based assets represent 24 percent of total assets.
Assets per advisor are now roughly $86 million, up from $84 million in September 2009 and $66 million in December 2008. Net new assets stood at -$4.7 billion in December 2009 vs. -$8.8 billion in September 2009 and -$7.4 billion in December 2008.
For all of 2009, the Morgan Stanley's Global Wealth Management Group had pre-tax income from continuing operations of $559 million, compared with a pre-tax income from continuing operations of $1.17 billion last year.
Morgan Stanley is "in a different place than Bank of America," says Chip Roame, head of the consultancy Tiburon Strategic Advisors. "Their value proposition to both clients and advisors is their investment bank model, and my guess is that they will lift average production fairly quickly to meet that of Merrill Lynch."
Merrill Lynch
Bank of America-Merrill Lynch says its financial-advisor force (aka "the thundering herd" of brokers) is stable at 15,006 as of the end of 2009. This does put the total number of FAs down about 800, though, from the 15,882 it reported as of March 31, 2009.
"In Global Wealth and Investment Management, the financial advisor network of more than 15,000 was up slightly from the third quarter as the retention rate stood at the highest level in recent years and the company increased hiring, training and development of new advisors," the company explains.
In terms of trailing-12-month sales or production, Merrill advisors are now at $830,000 on average for the fourth quarter of 2009 and $817,000 for the full year 2009.
Client balances in Merrill Lynch accounts total $1.43 trillion, representing an average $95 million per advisor.
The GWIM unit, which includes Merrill and U.S. Trust, is now led by Sallie Krawcheck, formerly of Citi/Smith Barney. U.S. Trust has 3,957 advisors vs. 4.473 at the end of 2008. Client balances total $316 billion.
For the full year 2009, Bank of America says Merrill Lynch Global Wealth Management net income grew 22 percent to $1.5 billion, out of total net income for the Global Wealth and Investment Management unit of $2.5 billion.
Net revenue for the GWIM unit more than doubled to $18.1 billion in 2009 on higher investment and brokerage service income from the addition of Merrill Lynch, a $1.1 billion gain related to the BlackRock equity investment and the lower level of support for certain cash funds.
For the fourth-quarter, BofA's GWIM unit grew net income $816 million to $1.3 billion, compared with the same period last year as revenue increased to $5.5 billion. The increase in revenue was driven primarily by the Merrill Lynch acquisition and the gain related to the BlackRock equity interest, according to BofA.
