Despite shrinking headcount, the wirehouse channel boasts a more productive advisor base, averaging $198 million per advisor at an increase of 14.4% year-over-year. This compares to an average of $88.1 million across all channels, according to Cerulli Associate’s report U.S. Advisor Metrics 2021: Client Acquisition in the Digital Age.
As wirehouses prioritize productivity, other advisory channels are capturing marketshare. The wirehouse channel, which has now lost 6.2 percentage points in asset marketshare since 2010, is projected to cede an additional 6.5 percentage points of total asset marketshare by year-end 2025.
By 2025, Cerulli projects that 30.6% of the industry’s assets will be managed by advisors in the independent and hybrid registered investment advisor (RIA) channels. The national/regional broker/dealer (B/D) channel (15.2%) is already overtaking the wirehouse channel (14.9%) in headcount marketshare.
The report shows that wirehouses are focused on wealthier clients, technology enhancements, client acquisition, and equipping their advisors with robust specialized support services. “Wirehouses are playing to their strength and providing advisors with the tools they need to capture and grow wealth,” says Marina Shtyrkov, associate director.
As the most productive channel, wirehouses have designed internal resources, fully integrated workstations, and teams that include multiple specialists spanning global capabilities. “Outside of a few niche B/Ds, banks, and highly specialized RIAs and multi-family offices, this scale can be mimicked but rarely matched,” she adds.
Main challenges
Advisors most commonly identify new client acquisition (52%), compliance (40%), and managing technology (30%) as their practice’s primary challenges. Cerulli points out that wirehouses have leveraged their scale to minimize these productivity hurdles for their advisors and tailor the firm’s resources to address the needs of large practices working with affluent clientele.
As a result, mega teams -practices with $500 million or more in AUM- are most pronounced in the wirehouse channel, which accounts for 41% of the industry’s mega teams. “Advisors are frequently held back by competing priorities as they balance the daily needs of their clients and the operational aspects of their businesses. Instead of vying for headcount, wirehouses have concentrated on solving these organic growth challenges”, says Shtyrkov.
Firms looking to increase productivity should focus on winning greater walletshare, advisor teaming, and merger and acquisition opportunities. However, in Cerulli’s view, they cannot lose sight of the capital required to develop infrastructure to support these efforts, as well as to recruit and retain practices working upmarket.
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