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Study: Breakaway trend may slow as wirehouse mergers start to click

To keep brokers, some wirehouses may offer more independent platforms

Author Brooke Southall June 1, 2010 at 5:27 AM
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Alois Pirker: Wirehouses are watching the breakaway movement slowly and are likely to adapt. "They're not stupid."

Sean Cunniff


Alois Pirker

Jeff Spears

Jeff Spears

June 1, 2010 — 1:22 PM

Great article.

Merrill before the BofA merger attempted to allow their brokers an “independent option” through their custody and clearing group, Broadcourt. Unfortunately Broadcourt has never achieved critical mass and is a a victim of merger cost cutting.

I agree with Alois that once brokers believe they are losing clients they will be willing to give the retention bonus back.

Stephen Winks

Stephen Winks

June 1, 2010 — 2:17 PM

The industry has for decades avoided hearing what it did not want to hear, particularily when it comes to public trust and its inability to support advisory services and the fiduciary standing of its brokers in the best interests of the consumer.

The market down turn, the investment banking crisis, the loss of confidence of the investing public, the mergers to literally keep our largest wirehouses afloat, and public Congressional testimony demonstrating the inadequacy of the suitability standard, is the perfect storm and has certainly made the industry less insular and open to new ideas. But it is a terribly disappointing solution for advisors and consumers that structural solutions like advancing custodial relationships for top advisors and/or independent advisor relationships for less productive advisors would be discussed as the industry’s Plan B default position. The industry completely ignores the consumer and the desire of the advisor to act in the best interest of the consumer. Rather than the industry directly addressing public trust by acknowledging advice is being provided and acknowledging its responsibility to properly resource its advisors, it is clear the industry is just thinking in its own interests on what is the least it can do. I would suggest this short term myopic view is short sighted. The industry has everything to win by aligning its bests interests with that of the consumer by safely bringing easy to execute fiduciary counsel within the reach of every advisor.

Custodial and independent relationships do not resolve the public trust problem which persists on the reliability of advice. It only establishes the Achilles Heal of the wirehouses—by design it can not assure that its brokers can act in their best interests of the consumer by acknowledging fiduciary standing. This can only be resolved by properly resourcing brokers/advisors so they can to act in the best interests of the consumer based on objective, non-negotialble fiduciary criteria of statute, case law and regulatory opinion letters.

The industry makes an all or nothing bet when it focuses on structural solutions and is very likely to lose by ignoring the best interests of the consumer.


Jeff Spears

Jeff Spears

June 1, 2010 — 2:35 PM

SCW you are 110% right! My business partner and I just wrote a blog on the fiduciary vs. suitability subject. Your response here is more comprehensive.


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