Wirehouses Losing Market Share; RIAs, Other Wealth Models Benefit - Study

Tom Burroughes

29 March 2012

Wirehouses are losing share on the market for high net worth clients as other business models of wealth management like registered investment advisors prove more attractive and as people diversify their accounts, according to Cerulli Associates, media reports said.

The share is expected to fall to 42 per cent in 2014 from 45 per cent in 2010, the report said. The largest firms, such as Bank of America Merrill Lynch, Morgan Stanley Smith Barney, Wells Fargo, and UBS, will see their share of the total market erode from a peak of 56 per cent in 2007.

Private client groups overtook wirehouses as the biggest wealth management players in 2010, holding 47 per cent, or almost $2.2 trillion of assets. The 45 per cent stake held by wireshouses equated to $2.1 trillion.

The financial crisis of 2008 has taken its toll, as worried investors pulled money from wirehouses, either placing it in other types of account or holding the money themselves.

Private client groups are exploiting the shift, the report said.

“Firms that were perceived as safe, such as mid-size broker/dealers or bank trust departments provided a safe haven for nervous investors and advisors that were ready to make a move. In turn, these firms have aggressively ramped up their hiring in the HNW space,” Rob Testa, lead analyst for Cerulli’s HNW research, was quoted as saying.

The registered investment advisor/multi-family office segment of the market grew its assets under management by 18 per cent in 2010, the fastest rate of any type of financial player.