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A new report by industry research firm Cerulli Associates found that 58% of all retail client assets in wealth management were housed at the top 10 largest broker-dealer firms by assets under management, as of the end of 2022. Key findings, published in the full report "U.S. Broker/Dealer Marketplace 2023: The Challenging Pursuit of Organic Growth,"
That means out of a total of $26.9 trillion of AUM in the retail wealth management universe, 10 big firms oversee nearly $16 trillion. The wirehouses, in particular, dominate that list — despite constant headlines
"Over the last decade, one-fifth of the top-25 B/D firms by AUM as of 2012 have either been acquired or merged,
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"When we present this data to our clients, they're always taken by surprise," said Mike Rose, director of wealth management at Cerulli Associates and the lead author on the report, in an interview. Many in the industry, despite following the news of mergers and acquisitions, are still shocked to learn of the sheer magnitude of assets controlled by the largest firms.
"I always tell people that the four wirehouse firms — Morgan, Merrill, UBS and Wells Fargo Advisors — those four firms control more assets than the 16,000 RIAs combined," Rose said.
He added that the top five spots among the largest broker-dealers were dominated by the wirehouses and regional-national firm Edward Jones. LPL,
The report's data was primarily based on research conducted by Cerulli in 2022, a spokesperson for Cerulli confirmed in an email.
Wirehouses in particular shined when it came to relationships with high net worth and ultrahigh net worth clients — far and away, they had the greatest share of clients with wealth above $5 million, since such clients were likely to prefer the benefits of additional investment banking and lending services those wirehouses offer, Rose said.
However, the report found a slight decline across the wirehouses in terms of advisor headcount and market share in the past five and 10 years, respectively, while the national and regional broker-dealers grew around the same amount. Independent and hybrid registered investment advisors, on the other hand, grew the most rapidly during that time.
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"The wirehouses, regardless of what we hear anecdotally, are still a very viable home for advisors, especially those that are working with the high net worth and ultrahigh net worth" clients, industry recruiter Louis Diamond, president of Diamond Consultants, said in an interview.
Diamond said around half the advisors he sees leaving wirehouses in a given year choose to join another wirehouse, rather than leave the channel. "The reason is comfort, familiarity, the fact that they're successful with everything under one roof where they don't have to go and build their own technology stacks or source products," he said. "And they also benefit from the brand … [but] not all wirehouses are created equal."
For smaller firms that may find it harder to buy and bulk up in a higher interest rate environment, Rose said there are still ways to survive. "You don't have to be the best at every single [offering]" to advisors, he said.
"But you need to understand what your differentiation is and what your value proposition is, and make sure you're targeting your messages to the types of advisors with whom that's going to resonate."
