Wirehouses had a particularly rough year in 2018 compared to other channels, and their financial advisors now have the same market share of client assets as advisors at clearing and custody firms, according to news reports.
Client assets overall shrank by 2.1% to $23.7 trillion, the biggest decline in more than a decade, ThinkAdvisor writes, citing a recent report from research firm Aite Group. Meanwhile, advisor ranks industry-wide only grew less than 1%, Aite found, according to the publication.
Client assets at wirehouses, meanwhile, shrank 5.7% in 2018, while their advisor ranks dropped by 400 brokers, according to the report cited by ThinkAdvisor. At the same time, self-clearing retail brokers lost 2.2% in assets but added around 3,000 brokers; discount and online brokers shed 0.9% in assets but added 150 brokers; and clearing and custody firms' assets rose 2% while the number of advisors they serve inched up by a little over 500, Aite found, according to the publication.
Clearing and custody firms now share the top spot for the share of overall client assets with wirehouses, with each managing 30.3% of the market share, ThinkAdvisor writes, citing the report. And that’s a “validation of the RIA advisor model,” said Greg O’Gara, a senior research analyst at Aite and co-author of the report, according to the publication. Discount and online brokerages controlled a 21.5% share of the assets while self-clearing retail brokerages had 18%, according to the report cited by ThinkAdvisor.
Aite projects that RIAs and other clients of clearing and custody firms will control 31.4% of client assets by 2022, while wirehouses’ market share will fall to 28.5% and self-clearing retail brokers’ to 17.2%, according to the publication. Discount online brokerages’ market share is expected to rise to 22.9%, ThinkAdvisor writes, citing the report.