Wirehouse Assets: Still on Top, But Losing Market Share

The four wirehouses continue to dominate the list of sponsors of separately managed accounts for the second quarter of this year, according to a research report just issued by the Money Management Institute and Dover Financial Research.

The report lists the top five SMA sponsors as Morgan Stanley Smith Barney, BofA-Merrill Lynch, Wells Fargo, UBS and Charles Schwab.

Morgan Stanley Smith Barney contributed $173.6 billion of the total SMA advisory assets of nearly $500 billion in the second quarter of 2010, while Merrill contributed $146.3 billion.

Overall, the four wirehouse broker-dealers have about $1.1 trillion in managed solutions, or MS, assets - which are investment solutions delivered via a platform or through other advisor programs, according to MMI and DFR. This is up from $885 billion a year ago.

And while the wirehouse assets represent 60% of all assets in managed solutions nationwide, this figure is down from 64% of all assets a year ago.

Non-wirehouse firms have grown their MS assets to $711 billion in the second quarter from about $500 billion a year ago, giving them a 40% market share vs. last year's 36%.

"Over time, you will see the [wirehouse] numbers shift and decline," said Gib Watson, president and CEO of Prima Capital, an independent source for managed-account research and solutions, in a phone interview.

"The SMA assets will morph into unified managed accounts and leak out of the wirehouse channel," Watson explained. "This is especially true because the breakaway broker phenomenon is becoming a reality."

The predominance of wirehouse firms in SMA charts, he adds, "is a vestige of days gone by in the wrap business."

In terms of specific firms and their managed assets (vs. the first quarter), the report shares the following:

• Morgan Stanley Smith Barney, $386 billion, down 4%;
• BofA-Merrill Lynch, $312 billion, down 5%;
• Wells Fargo, $197 billion, down 5%;
• UBS, $162 billion, down 5%;
• Schwab, $95 billion, down 4%;
• Fidelity, $90 billion, down 2%;
• Ameriprise, $83 billion, down 3%;
• LPL Financial, $79 billion, down 3%;
• Raymond James, $45 billion, down 8%; and
• Edward Jones, $39 billion, up 9%.