Thursday’s Headlines: Wirehouse Market Share Continues to Dwindle

It’s a dim picture for wirehouses. While their market has been slipping since the financial crisis, one consultancy predicts market share at four major wirehouses could drop by 35 percent by 2013, bringing the total slippage to 50 percent since before the crisis, Investment News reports.

While total assets under management throughout the financial industry recovered to pre-crises levels of $11.2 trillion at the end of 2010, those at Merrill Lynch Wealth Management, Morgan Stanley Smith Barney, UBS and Wells Fargo fell from $5.5 trillion to $4.8 trillion, and from 50 percent market share to 43 percent.

While some banks have been actively downsizing their wirehouses to focus on more profitable businesses, this model is not without its issues. Advisors are departing wirehouses for independent broker-dealers and RIA, which are the fastest growing market segments, and clients are parting ways with their advisors as their investments falter—another factor in the industry’s dwindling market share.

The article states: However, perhaps most troubling of all from the point of view of the wirehouses, is the fact that despite their focus on the high-net-worth market, they are losing share there, too. According to Cerulli's research, the wirehouses' share of the HNW market—clients with more than $5 million in assets, fell from 56% in 2008 to 45% at the end of 2010.

 

Other News:

Northern Trust will eliminate 700 positions, bringing the total cutbacks by custody banks to 4,450 in 13 months. [Businessweek]

Private equity giant Man Group will reduce pay and eliminate jobs. [Bloomberg]

BofA swung to a Q4 profit on the sale of shares in China Construction Bank and swapping preferred for common stock. [DealBook]

Morgan Stanley reported a Q4 loss on settlements; global wealth management unit remained steady. [DealBook]

Custody bank State Street’s Q4 earnings missed estimates. [Bloomberg]

BlackRock’s Q4 profit fell 16 percent on lower fees and securities lending revenue. [WSJ]

TD Bank was ordered by a federal jury to pay investors $67 million for its role in a $1.2 billion Ponzi scheme. [AP]

The SEC charged the BankAtlantic CEO with misleading investors. [NY Times]

Seven people were charged in Manhattan federal court related to a federal hedge fund insider-trading investigation. [Businessweek]

Hedge fund firm Tell Investments is closing its two principal funds and returning $767 million to investors. [Reuters]

Foreign direct investment in Indonesia jumped 20 percent in 2011 as its credit ratings got a boost. [WSJ]

PE-owned BankUnited called off its short sale. [DealBook]

Blackstone is pursuing more property investments in China. [Reuters]

China is to consider relaxing capital requirements for banks. [Bloomberg]

The number of federal securities lawsuits filed by investors alleging fraud at corporations was flat last year, but lower than average. [DealBook]

NYSE regulators warned members that gambling is prohibited. [WSJ]