Page 44 - Investment Advisor January/February 2022

BROKER-DEALER BEAT

By Jeff Berman

Wirehouses to Keep Losing Market Share: Report

Aite-Novarica Group predicts the wirehouses’ share of client assets could
drop from 25% in 2021 to 21.9% by 2025.

he wirehouses have been steadi-
ly losing client investment asset
Tmarket share over the past
decade and that trend is only expect-
ed to continue in 2022 and beyond,
according to Aite-Novarica Group. The
research firm expects the market share
for non-wirehouse, self-clearing, retail
broker-dealer firms to remain about
flat between 2021 and 2025 and for
discount/online brokerage firms to
increase from 23.5% in 2021 to 26.8%
in 2025.
The firm is projecting “relatively
stable market conditions and no major
change in performance differentials
among channels” over the next few tory for this segment,” according to Aite- to Aite-Novarica.
years, meaning “we do not expect one Novarica. Although the number of Morgan
channel to suddenly become much Another positive: Total client assets Stanley advisors inched up 3% (532
more efficient than another,” it said in the wirehouse segment increased 16% advisors) to about 16,000 advisors in
in the new report, “New Realities In for the second straight year in 2020, to 2020 from 2019, Merrill’s advisor count
Wealth Management: The Storm Passes, $9.6 trillion, the research firm said. dipped 1% to 17,331, while Wells Fargo’s
Growth Continues.” Each of the four wirehouses increased fell 6% to 13,513 and UBS’s dropped 4%
their client assets from 2019 to 2020, to 6,305, the report said.
WIREHOUSE TRAJECTORY with Morgan Stanley’s growing 17% to “While advisors’ departure from the
Still, the wirehouse channel is expected $3.2 trillion, Merrill Lynch’s growing 13% wirehouses is primarily driven by the
to continue losing more market share to $2.9 trillion, Wells Fargo’s jumping increased accessibility of independence,
than any other financial wealth manage- 22% to $2 trillion, and UBS’s increasing significant numbers of advisor depar-
ment segment through 2025 after being 12% to $1.6 trillion, Aite-Novarica said. tures have been due to the wirehouses
the only channel in the industry to see a UBS “leads the segment regarding pruning their least productive advisors,”
decline in market share every year since client assets per advisor,” with an aver- the report said.
2016, according to the report. age of $249 million, compared with
After shrinking from 33% in 2010 to $198 million for Morgan Stanley’s aver- NON-WIREHOUSE BD STABILITY
25.8% in 2020, the wirehouse share will age advisor, $167 million for Merrill The self-clearing retail brokerage/non-
continue to fall, declining from 25% in Lynch, and $148 million for Wells Fargo, wirehouse segment has “historically
2021 to 24.2% in 2022 and 21.9% in 2025, according to the research firm. retained a stable 16% of the market, and
Aite-Novarica Group estimates. “The wirehouses are actively right- Aite-Novarica Group expects this share
But recent shifts in strategy by Bank sizing their client bases, targeting larger to remain unchanged over the next four
of America and Morgan Stanley, which clients, and shifting the less affluent to years as firms transition from inorganic
have made “substantial investments in hybrid and robo-advice,” the report said. to organic growth,” the report said.
online brokerage to generate in-house In the meantime, however, the wire- The channel’s market share is pro-
referrals to their wirehouse businesses,” houses also “continue to steadily lose jected to dip to 16.3% in 2021 from 16.4% Adobe Stock
could “change the market share trajec- advisors to other channels,” according last year and then dip to 16.2% in 2022

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