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Tuesday, December 15, 2009|
Big Wirehouse Teams Still Dominate Distribution
Fundsters, don't sell the big wirehouse teams short just yet. Despite the turmoil over the past year and upswing in independent broker-dealers, the largest wirehouse advisor teams control approximately $3 trillion, or 80 percent, of all wirehouse assets, determines the December issue of Cerulli's asset management edition released on Monday.
The large wirehouse teams category includes teams that manage at least $200 million in assets. The report found that most of these teams tend to count four advisors, including an asset management specialist, plus two support personnel.
Ruling the roost are Merrill Lynch/Bank of America, Morgan Stanley Smith Barney, Wells Fargo and UBS, which combined account for nearly half of all advisor-managed assets.
What has allowed these behemoths to weather the storm? Their size for one, which allows them to offer a breadth of services and stands to insulate them from potential regulatory changes and trends that may adversely impact mutual funds' profitability. Furthermore, the report suggests that the large wirehouses often exhibit a higher level of loyalty to their channel due to their ties to their employers' proprietary offerings.
It seems then that bigger can, in fact, be better when it comes to distribution strategies and getting the most bang for your buck –- particularly when the going gets tough and asset managers seek to increase their cost efficiency by narrowing their distribution focus. When formulating a strategy for concentrating distribution among fewer hands, many managers find the appeal of the large wirehouses amplified.
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