Displaying items by tag: wirehouses

Financial advisors frequently seek insights into the evolving landscape of advisor transitions and recruitment deals within the wealth management industry. To address this demand, a dedicated annual report analyzes raw data and offers tailored intelligence, unveiling notable surprises that challenge conventional wisdom. 

One such revelation was the modest uptick in advisor recruitment despite a thriving equity market, as well as the unexpected success of boutique and regional firms in attracting top talent through balanced approaches and competitive deals.  

Even firms perceived as laggards managed to secure notable wins, highlighting the diverse appeal of various business models. The final big finding is that while transition dollars have certainly increased it hasn’t really translated to a substantial increase in movement.

Finsum: Another trend we have noticed is the key piece the tools and tech, that are offered play in advisor recruiting. 

There have been constant rumors swirling that UBS intends to sell its US wealth management unit. In part, it’s due to the bank’s North American wealth management unit delivering lower returns than its peers and UBS’ wealth management units in other geographies. 

Another factor is that European regulators are reportedly looking to impose increased capital requirements for banks with foreign subsidiaries. The unit has also been underperforming, with profit declining by 31% in Q1 and its cost-to-income ratio more than 20% above UBS’ other geographies. Advisor headcount also declined from 6,147 to 6,079. 

During UBS’ Q1 earnings report, CEO Sergio Ermotti dismissed reports that a sale was on the horizon despite these challenges. He sees a presence in North American wealth management as integral to UBS’ ambitions of being a global bank, adding that “shrinking back to greatness is not a strategy.”

Instead, UBS plans to keep investing in its North American wealth management business, identifying it as a ‘key… growth market’. It believes that over the next 3 years, UBS can shrink the profitability gap with its competitors. Part of its growth strategy is to more aggressively refer investment banking customers to wealth management. 

Finsum: Despite middling results from its North American wealth management unit, UBS dismissed speculation that the unit could be sold. Instead, it plans to invest in the unit and hopes to narrow the profitability gap with peers over the next 3 years.

JPMorgan had six advisor groups, managing a cumulative of nearly $15 billion in assets, leave the company on April 19. In total, 50 employees left the company to join competitors including Merril Lynch, Morgan Stanley, Citizens, and Wells Fargo.

Notably, all of the teams were originally from First Republic Bank, which collapsed last year during the regional bank crisis and was taken over by JPMorgan. About a third of its advisors departed First Republic during its turmoil, prior to the acquisition. Following these exits, First Republic’s private banking segment still had over 200 financial advisors, managing $200 billion in assets. 

First Republic was a leading provider of private banking and wealth management solutions for high-net-worth clients. It was also an aggressive recruiter of advisors and brokers from Wall Street banks, luring them with generous packages. In fact, one departing team was recruited from JPMorgan by First Republic in 2020.

Currently, JPMorgan has $3.3 trillion in client assets, managed by advisors at bank branches and its wealth management group, which services high  and ultra high-net-worth investors. It’s an indication that growing wealth management through acquisitions is not a straightforward process and is dependent on retaining advisors. 

Finsum: JPMorgan had six advisor teams depart the company last week. These advisors came to the company through the acquisition of First Republic and managed nearly $15 billion in assets.

According to a new research report from Cerulli Associates, financial advisors are retiring at a pace, faster than they can be replaced. The firm estimates that 109,000 financial advisors in the US will retire over the next decade. This is about 38% of all advisors in the US, representing about 42% of total assets. Overall, the industry needs to do a better job of investing in training programs and giving younger advisors more opportunities in client-facing and asset-gathering roles.

The report highlighted another trend as older, established advisors will continue to move into RIAs given more control and the ability to sell their practice. Currently, advisors over the age of 55, manage 56.7% of total assets, despite accounting for 42% of advisors. 

RIAs and independent broker-dealers saw headcount growth of 856 and 685, respectively, in the first 9 months of 2023. In contrast, wirehouses lost 612 advisors. This has been the case since 2008, and Cerulli forecasts that the share of advisors at wirehouses will go from 15.1% to 13.4% over the next 5 years.  

In contrast, RIAs are where growth is happening as most broker-dealers now offer some sort of RIA platform to entice recruits. There has also been consolidation, driven by private equity, with a total of 321 deals in 2023. 

Finsum: Cerulli issued a new report which revealed that nearly 40% of advisors will be retiring over the next decade. 

According to a recent announcement, Sanctuary Wealth lured a team with $1.5 billion in assets away from Merrill Lynch Wealth Management in The Woodlands, Texas outside Houston. According to Sanctuary, the seven-person group, which generated about $11 million in annual revenue, is the largest group by assets to join Sanctuary since its 2018 launch. The Merrill team is led by brothers Brent R. and Bradley C. Chappell who inherited the practice from their father, Robert D. Chappell, who retired from Merrill Lynch in 2019. The Chappells have known Sanctuary President Vince Fertitta “for many years” from his days working as a divisional manager at Merrill in Texas before his joining Sanctuary in 2019. Brent Chappell started on his father’s team in 2003 after graduating from the University of Texas at Austin, and Brad joined three years later after graduating from the same school. The group also includes advisors Michael Mills and Spencer Carlson as well as support staff Chel Larkin, Jaymie Wendt, and Brianna Warren. As part of the announcement, Brad Chappell said the following, “By partnering with Sanctuary, we see real opportunities to grow our business that weren’t available to us previously and wouldn’t exist in a lateral move to another wirehouse.”

Finsum:A seven-person team with $1.5 billion in assets jumped from Merrill Lynch to Sanctuary Wealth due to opportunities to grow the business that weren’t previously available to them.