The largest brokerages are pulling away from everything that's small in the pursuit of bigger profits. As On Wall Street Senior Editor Andrew Welsch
It's not a new trend. Two years ago, Welsch writes, UBS raised minimum account sizes to $100,000 from $75,000. Last year, Merrill Lynch told its 14,000-plus advisor force that they would be paid 20% on accounts of $250,000 or less if those accounts made up less than a fifth of their overall book of business. Advisors won't get any payment if such accounts represent more than a fifth of a book of business.
Ouch! A quarter of a million dollars just doesn't hold up the way it used to. But there are advisors, particularly new recruits to the business, who are counting on every last dime to build assets.
A wirehouse trainee, who asked not to be named because he did not have permission from his firm to speak publicly, said he was making "just enough" on smaller accounts after almost two years on the job and admitted he was losing the motivation he needed to build the kind of book his firm wants.
I asked whether he had any luck joining a team. Firms are pushing teaming for new advisors like him, who benefit from the mentoring and leads, while helping to build an established business.
"None," the advisor trainee said. "I can't seem to break into a team. They're very picky about who signs on and looking for big producers, big assets."
Recruiters know this problem; breaking into a team isn't exactly the easiest course for new recruits. "The question is, 'What do you bring to the table and how are you compensated?'" says recruiter Bill Willis, president of Willis Consulting in Los Angeles.
The focus on bigger clients by many teams mirrors that of the firms, and it potentially leaves advisors with the uneasy feeling that this business only has room for top talent managing the largest accounts.
The trainee I spoke with said he was considering other career options. "It's a great job, and the people are great," he said. "I'm just not into the whole asset-gathering thing the way they want me to be."
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