Fidelity, Schwab, Vanguard Outrank Wirehouses in Prospect Recognition–Cerulli
Fidelity, Charles Schwab and Vanguard are in a stronger position than wirehouses and regional competitors to grab business from prospects with $100,000 to more than $2 million to invest because of their top-of-mind brand status, according to a new report from Cerulli Associates.
In its survey of 11,000 “affluent” U.S. households, 50% of respondents named Fidelity on an unprompted basis when asked to name a wealth management firm or investment company, and also placed at the top of the 12-company list when prompts and other factors were considered.
Merrill Lynch ranked as the most recognized of the wirehouses on an unprompted basis, mentioned by 15% of respondents. Fourteen percent cited Wells Fargo Advisors (and Wells Fargo Bank), and 11% named Morgan Stanley without prompting. UBS was not included in the suggested list because Phoenix Marketing International, which conducted the survey, did not go beyond the top 12 wealth management brands by name recognition, a Cerulli official said.
Fidelity’s branding success is a logical consequence of its marketing prowess with retail investors and retirement plan sponsors, according to the consulting firm.
“The firm’s extensive advertising, combined with its presence as a retirement plan provider for millions of participants, makes it the most formidable brand in the wealth management segment,” said Scott Smith, Cerulli’s director of advice relationships, in a prepared statement.
In an overall ranking melding the unprompted and prompted responses, Fidelity achieved a score across the household wealth spectrum more than twice as high (82.6) as runners-up Charles Schwab (40.4), Vanguard (30.3) and Chase (20.9). Chase score high because of its strength among lower-wealth-tier bank customers, according to Cerulli.
The poll included both Merrill Lynch and Bank of America among wealth management choices. Merrill was recognized by 15% of respondents unprompted and 88% on a prompted basis, compared with 6% who mentioned its parent bank unprompted and 82% with a prompt.
Merrill is in a “transitionary phase” of rebranding, Cerulli wrote, referring to BofA’s campaign to impose its bank name across its spectrum of private banking and discount brokerage businesses while identifying Merrill more prominently in branding as a bank company.
“With more than 10 years having passed since the bank’s acquisition of Merrill Lynch at the height of the financial crisis, the firm has experienced some success in finding areas in which the banking and brokerage arms act as true complements, but is still refining its long-term brand strategy in the wealth management space,” the Cerulli report said.
Morgan Stanley garnered the lowest brand familiarity score on the melded “prompted/unprompted” basis among wirehouses suggested to survey respondents. It ranked ninth among the 12 firms, beating only Bank of America, E*Trade and Ameriprise.
Among respondents with more than $2 million of assets to invest, a category increasingly targeted by wirehouses, Fidelity, Schwab and Vanguard still ranked at the top of the list. Merrill, Morgan Stanley, Chase and Wells Fargo were in the #4 to #7 recognition positions.
Ameriprise ranked as the least recognized firm on an unprompted and prompted basis, despite its longstanding marketing of customized financial planning expertise to help investors meet needs and goals, according to Cerulli.
“However, given investors’ elevated interest in this topic and the firm’s high concentration of CFP [certified financial planner] designation holders, customized advice is likely a key to the firm’s long-term success,” the report said.
Wells Fargo “still faces the lingering repercussions of earlier missteps,” Cerulli wrote in referencing its fake-account scandal, “with just 29% of respondents indicating that they believe Wells Fargo is a brand that they can trust, 10 percentage points lower than any of the other firms covered in this research.”
Investors surveyed by Phoenix Marketing included “affluent” households with over $250,000 in investable assets and “near-affluent” households that are headed by someone below the age of 45 with $125,000 in household income.
Cerulli, a consultant to asset management firms on sales strategies, is based in Boston, Fidelity’s hometown.
Schwab took the “place” position in the wealth management recognition survey, mentioned by 33% of investors overall. Vanguard’s “show” position in the unaided recognition factor was undercut by its eighth-place finish in the “prompted awareness” level.
“By opting out of the more active marketing options used by Fidelity and Schwab, Vanguard consigns itself to a somewhat reduced awareness level, but this has little downside for the firm as it has been awash in inflows in recent years,” the Cerulli report opined
Other firms ranked in the survey include Edward Jones (15% unprompted and 76% prompted recognition), TD Ameritrade (12% unprompted and 83% prompted) and E*Trade (8% unprompted and 80% prompted).