How the Wirehouses Stack Up
Published October 30, 2014 3:49 PM
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Updated April 25, 2016 4:18 PM
1 Min Read
How the Wirehouses Stack Up
All four wirehouses have reported third quarter earnings and the industry now has a moment to take stock. Who has the largest advisor force? Where is revenue growing the fastest? How high is advisor productivity? Click through our slideshow to see how the wirehouse firms stack up on these and other measures or view in a single-page version here.
The Largest Advisor Force
Morgan Stanley's advisor force remains the largest among wirehouses, but was down 1% year-over-year for the third quarter. At the same time Merrill Lynch has made some gains this year. The firm added 155 advisors to boost total levels to 14,000 for the third quarter.
"What stands out for me is the decline in advisors [at Morgan]. At Merrill Lynch we've seen a healthy increase. They are moving in different directions," Alois Pirker, research director at Aite Group, said in an interview with On Wall Street following Morgan's earnings release.
"What stands out for me is the decline in advisors [at Morgan]. At Merrill Lynch we've seen a healthy increase. They are moving in different directions," Alois Pirker, research director at Aite Group, said in an interview with On Wall Street following Morgan's earnings release.
Revenue
Revenues have been growing for all wealth management firms. Although headcount fell at Morgan Stanley, revenue rose. The New York-based firm recorded a 9% year-over-year increase in revenue, rising to $3.9 billion for the third quarter.
The fastest growth in revenue occurred at UBS Wealth Management Americas, which reported a 10% increase year-over-year. Total revenue hit $1.919 billion, up from $1.748 billion.
The fastest growth in revenue occurred at UBS Wealth Management Americas, which reported a 10% increase year-over-year. Total revenue hit $1.919 billion, up from $1.748 billion.
Expenses
Expenses have grown as well. The biggest single cost tends to be advisor compensation. At UBS Wealth Management Americas, the firm tallied $1.664 billion in costs for the third quarter. Of that, $737 million was due to financial advisor compensation, which was up 10% year-over-year.
Total Assets
All of the wirehouses have seen significant growth in the total client assets under management. Earlier this year, Morgan Stanley's total AUM topped $2 trillion.
"We were pleased with that because it is a lot of money and says a lot about how much confidence our clients have in us," said Greg Fleming, president of Morgan Stanley Wealth Management, in a recent interview with On Wall Street. "We want to continue to build that and grow that. We think that over the next five years or so, that number could be $3 trillion."
"We were pleased with that because it is a lot of money and says a lot about how much confidence our clients have in us," said Greg Fleming, president of Morgan Stanley Wealth Management, in a recent interview with On Wall Street. "We want to continue to build that and grow that. We think that over the next five years or so, that number could be $3 trillion."
Where The Most Productive Advisors Are
The industry's most productive FAs, based on a revenue per advisor basis, are at UBS, according to earnings reports. Revenue per advisor at the Swiss-owned firm grew 9% year-over-year.
As noted, Merrill Lynch has been growing its headcount. But the firm also boosted productivity in the third quarter.
"We're seeing a movement in a positive direction for several quarters now, and at the same time you're seeing average production go up as well," Pirker said during an interview following Merrill's earnings release. "Ultimately, the problem is that if you add headcount, you see production go down. But they've been able to grow headcount while growing production. So they must be adding some solid [producing] advisors."
As noted, Merrill Lynch has been growing its headcount. But the firm also boosted productivity in the third quarter.
"We're seeing a movement in a positive direction for several quarters now, and at the same time you're seeing average production go up as well," Pirker said during an interview following Merrill's earnings release. "Ultimately, the problem is that if you add headcount, you see production go down. But they've been able to grow headcount while growing production. So they must be adding some solid [producing] advisors."
