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Rating:Wirehouses Take a Hit, but Still Wield Influence Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, September 16, 2009

Wirehouses Take a Hit, but Still Wield Influence

Reported by Daniel Tovrov

Although wirehouses have been struggling along with the rest of the economy, they still remain a large and intimidating force. The latest report from financial services research and consulting firm Cerulli Associates explains that even as assets dropped $1.5 trillion between 2007 and 2008, wirehouses are "still, by far, the most attractive channel [for mutual fund firms] in terms of total assets and assets per advisor," accounting for almost half of $8.3 trillion of retail client assets.

With the significant amount of assets controlled, wirehouses have been able to maintain a powerful influence over market pricing, and according to The Cerulli Edge report, distribution heads of several asset management firms fear that doing business with the wirehouses is becoming too expensive. As a result, RIA service providers are seeing increased activity, as asset managers devote more resources to alternative platforms.

The report also focused on the shift from traditional external wholesalers to hybrid and e-wholesalers at asset management companies. As sales forces are cut drastically around the nation, the number of e-wholesalers has shot up by over 20 percent in the last year. Although not as productive, Cerulli sees the hybrid and e-wholesalers as more cost effective, coming with a lower salary and travel budget.

The report does offer up sales strategies, for example, using traditional wholesalers in densely populated areas while e-wholesalers cover surrounding, less influential demographics. 

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