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TOP 5: Why Regional Wealth Management Brands Are On Fire — And Why You Should Care

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Unless you’ve been away on the latest recognition trip or wholesaler junket and missed the reality of a changing wealth management landscape — regional firms have been absolutely crushing it over the past 18 months.

Most prognosticators thought that the fiduciary rule and protocol exit disruptions would disproportionately and positively affect independents and RIA aggregators. Those businesses have benefited from the boom that has taken place in the halls of Stifel, Raymond James, Ameriprise, Janney, and others.

To drill down a bit, three players have gathered assets like they’ve never done before: Ameriprise, Stifel, and Raymond James.

But we aren’t here to just do a little math and play headcount parlor games. We are here to answer WHY it’s happening.

Here we go…

  1.  Culture, culture, culture. Merrill Lynch was an advisor’s dream twenty years ago. Brand cache, a belief in the advisor as the firm’s revenue center, stock stability and golden handcuffs, the ‘Thundering Herd’, and smart national marketing campaigns. Now, it’s an afterthought at Bank of America. Stripped down, brand destruction, forced cross-selling of cheapened bank products — Merrill Edge, etc. Regional names now ‘feel’ like Merrill felt in the 90’s — entrepreneurial and collegial. Their opinions and client focused businesses matter again. Culture.
  2. Recruiting deals at regionals are either equal to or larger than wirehouse deals. Just five years ago that simply wasn’t the case. Management at places like Ameriprise saw an opening when UBS decided to de-emphasize recruiting and reduce their recruiting deal numbers and stepped into the gap. Same for Stifel and Morgan Stanley reducing their recruiting deals. Money matters.
  3. Executive leadership. As wirehouses have seen significant churn amongst their leadership ranks, regionals have been ‘steady as she goes.’ Furthermore, regional leadership has made smart moves and kept their powder dry with respect to the DOL fiduciary rule knee jerk reactions. They waited, wirehouses panicked. Leadership.
  4. Demographics. As large scale, legacy teams are at the height of their earning power (and in the midst of a historic bull market), they are looking for a soft landing that won’t nip at their heels with new quotas connected to households, loans and checking accounts. Quotas that if not met, take a chunk out of their grid payouts. Regionals don’t play those games (see #1).
  5. Financial crisis residue. Wells Fargo still can’t get out of their own way. Merrill is no longer Merrill. Nearly everyone took a big bailout. But regionals don’t even have a whiff of what remains of that stink. No bailouts, no ‘too big to fail’ documentary cameos. It is an easy sell to clients who previously may have questioned a move to a regional name. That question is gone, replaced by ‘could it happen again?’ to legacy wirehouse firms.

Add it all up and you have legions of million-dollar producers taking VIP trips to Minneapolis, St. Louis, and St. Petersburg on the regular. And the pace doesn’t look like it’s about to slow. Every single quarter wirehouse headcount dwindles. No new narrative or bloated recruiting deal can compete with the reality of the above.

Regionals, or as they should be called ‘new nationals’, will continue to win.

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Comments (1)
  • The big firm, Edward Jones, is out for the long time Broker in their firm. Split his business 5 ways. Each new broker will not get a bonus but will contribute to paying expenses. The new brokers are easier to manage because they fear for their jobs. The old guy gets much less money for his business because the formula pays him less money for accounts that have not generated commissions for 12 months. They have a non compete contract with the old brokers that they will spend money on to get the clients to file U4 complaints and ruin the reputation of the old brokers.
    They have a huge overhead problem, Canada is a 10 Billion plus write off anytime. The main frame system is a huge failure and will eventually cost billions.

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