About 150 wirehouse teams with a combined $30 billion could fly the coop in 2013.
Contrary to conventional wisdom that the equity bull market would lull wirehouse brokers into contentment, custodians serving RIA firms aren’t seeing a slowdown in the pipeline of breakaway brokers. Pershing Advisor Solutions CEO Mark Tibergien acknowledges that wirehouse advisors go through “a long cycle” before pulling the trigger and leaving, but the number of teams looking to exit big Wall Street firms is slightly ahead of last year.
Tom Valverde, director of new business development at Pershing, estimates there are about 150 wirehouse teams managing about $30 billion in assets, seriously planning to go independent in 2013. He and Tibergien concede other custodians will see some of this business as well, and many breakaway brokers will opt to use multiple custodians.
“They feel they aren’t getting full value” for the money that their clients are paying and that they are giving up, Tibergien says. “Clients need more sophisticated options. The rules of supervision are geared to the lowest common denominator.”
While the giant wirehouses look for common solutions to a broad cross-section of clients, advisors increasingly are seeking more individualized recommendations. Consequently, they find themselves caught in a clash between what their employers need and what their clients want.
Tibergien finds that about one to three years after wirehouse teams set up shop as independents, they find themselves confronting many of the same issues many RIA firms are grappling with. These issues including breaking down the walls of their silos and behaving like ensembles, giving people management responsibilities and holding them accountable while addressing critical business issues like compensation, organizational structure and staff development.