Page 15 - Investment Advisor - November 2021

emerging business model for becoming separately managed “wrap account” at stemmed much of the pain that top advi-
an independent advisor. These new cus- upwards of 300 basis points, all-in. sor teams inside the wirehouses were
todial and clearing platforms enabled These wrap accounts re-bundle the feeling from the antiquated technology
independent advisors to “unbundle” cost of investment advice and manage- they were forced to use, the negative
their advice from the product trans- ment with transactions via an opaque brand headlines that made them have to
action, creating a clear, objective, fee- product structure that includes money defend their firm to their clients daily,
based differentiation for independent manager fees, underlying product fees, along with changing payout structures
advisors so that they could easily charge platform fees, trading costs and of that left them in constant sell-mode just
for their advice directly in a fiduciary, course the obligatory advisor commis- to maintain their compensation levels.
conflict-free model. sion, all for one convenient and non- So, while there have been a significant
transparent bundled fee. number of advisors leaving the wire-
IT’S A WRAP Combined with the marketing and houses in pursuit of greener pastures
Once again, this should have been the sales machine of tens of thousands of as independents, and there are more
end of the wirehouses, however, what incentivized brokers, “fee-based advice” options and resources for going inde-
we have seen time and time again is was king on Wall Street as there are now pendent than ever before, the majority
their ability to create new products and trillions of dollars in fee-based accounts of top advisors have chosen to stay. In
services and wrap themselves in the across the wirehouse industry, quietly fact, Morgan Stanley, for the first time in
latest marketing messages to remain rel- churning out record revenues year after recent memory, stopped the hemorrhag-
evant. Key to this ability is their prod- year for the big firms and their advisors. ing of its advisor headcount and actually
uct geniuses who went back to their The revenues wirehouse advisors can grew its advisor base by adding nearly
bundling-play book and developed the generate from these fee-based products 500 new advisors last year.

NOVEMBER 2021 INVESTMENT ADVISOR 13