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 positively affect independents and RIA aggregators. While those businesses have benefited the boom 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…
- Culture, culture, culture. Merrill Lynch was an advisors dream twenty years ago. Brand cache, a belief in the advisor as the firms revenue center, stock stability and golden handcuffs, the ‘Thundering Herd’, and smart national marketing campaigns. Now, it’s an after thought 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.
- 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.
- Executive leadership. As wirehouses have seen significant churn amongst their leadership ranks, regionals have been ‘steady as she goes’. Furthermore, regional leadership have made smart moves and kept their powder dry with respect the the DOL fiduciary rule knee jerk reactions. They waited, wirehouses panicked. Leadership.
- 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).
- 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.