A digest of some of the top insights that I’ve gathered from this week’s earnings calls. Full notes can be found here.
A lot more stability in financial advisor moves because the wirehouses have consolidated
“We are also seeing significantly lower attrition and financial advisor moves. This was not a planned outcome, but I think a direct result of the consolidation our industry has gone through in the last 20 or 30 years where there were effectively in traditional full-service large scale firms. There were four firms operating this country and there were a couple of midsized firms and after that it’s a very small operators and those four firms can only hire so many people from each other so many times before they stop doing that and we are at that threshold point now which I think is very exciting for industry stability.”
Clear numbers to illustrate the bifurcation of wealth
“if you look at the top-right-hand and half of this chart, a lot of the asset growth has actually been among the very wealthy.
Most people look at our business and think that we serve millions of small households. That is true, but we also served thousands of very, very, very large households and those are growing much faster. The growth rate is for the $10 million-plus household has been 71%, contrasted with the growth rate of the under $100,000 thousand household of -20%”
“In asset size, $41 billion resides in households with less than $100,000, $701 billion with households of more than 10 million.”
100m in assets per advisor
” it’s also a function of improving the productivity of our financial advisors who are now managing over $100 million per financial advisor and approaching $1 million per financial advisor in revenue we are close to.
We have 16,000 financial advisors”
You can’t really compare industry performance anymore
“I don’t think you can talk about the industry anymore, because listen once upon a time these were private partnerships that all did the same sort of thing and there were fixed income shops, there were strong equity shops, there were strong M&A shops and banking shops.
What is the industry now? You have many of the players are subsumed on the large universal banking franchise. There are very few sizable in fact none independent investment bank. They have all become fed bank holding companies, so you have to look at what each firm has to offer and what is the risk-adjusted return for each of the businesses, each of those firms have, so we don’t look at industry and performance, we look at each of our product groups in each of our businesses and how they doing in their industry.”
Morgan Stanley is two firms
“If you take Morgan Stanley, essentially think of it as two integrated firms. ”