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Krawcheck: Demise of Wirehouses Greatly Exaggerated

Channeling Mark Twain, former Merrill Lynch and Smith Barney boss Sallie Krawcheck told the MarketCounsel Summit for independent advisors that the demise of the wirehouses is greatly exaggerated. 

While wirehouses bled HNW assets after the Great Recession — going from a 53% market share to 42% in 2011 — the bleeding has stopped, according to Cerulli. And though the hybrid model is growing faster than any other, wirehouses are adapting, allowing a subset of their reps to be fee-based. Some, including Wells Fargo and Raymond James, allow advisors to choose between an independent model and a captive one. Wirehouses have 159% more assets than the average advisor, and they have successfully created models to focus their reps on higher-net-worth clients.

While Krawcheck was at Merrill, she claimed that they lost only 37 FAs in 2009 while picking up 26 advisors from independent BDs. Of course, those were the days of big retention packages and recruiting bonuses. 

Krawcheck scoffed at a claim by Pershing’s RIA leader Mark Tibergian that a wirehouse will buy a big RIA. Rather than worry about losing reps to independents and RIAs, Krawcheck advised wirehouses to refocus on training. Wirehouses, along with insurance agencies, have groomed the majority of today’s successful advisors. While independents and RIAs are attractive to advisors looking for more flexibility and a higher payout, training and education are not their strong suit, leaving teams to mostly fend for themselves in educating new advisors and staff.

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