The wealth management profession has experienced an unprecedented shift of assets and advisors in the last 15 months, according to a study from Aite Group, “New Realities in Wealth Management: Ready for the Sea Change?” As a result, registered investment advisory (RIA) firms and independent broker-dealers have taken market share from dominant wirehouse firms.

During 2008 and the first quarter of 2009, 311 RIA firms were founded that took in $24 billion in client assets, according to Boston-based research firm Aite, which cited leading RIA custodians. In the process, RIA firms gained 1.1% of the $10.8 trillion wealth management market. San Francisco-based Charles Schwab captured more than half of that business and Boston-based Fidelity Investments took 25%. Meanwhile, wirehouse firms lost 2.1% of market share, representing an asset pool of $225 billion. In particular, Merrill Lynch, Morgan Stanley and Smith Barney, all three of which are based in New York City, lost a combined $150 billion in client assets. (Morgan Stanley and Smith Barney merged in May, subsequent to the study.) At the same time, the number of financial advisors employed by wirehouses dropped by 5,944. Merrill Lynch lost 2,868 advisors, Morgan Stanley lost 281, and Smith Barney lost 2,795.     

As financial assets moved around, so did advisors and clients. Independent and regional broker-dealers added a total of 3,000 financial advisors to their ranks in 2008 alone. St. Louis-based Edward Jones hired 1,500 advisors and LPL Financial and Ameriprise Financial each hired 540 advisors. (For the purpose of the study, Aite grouped Edward Jones with independent broker-dealers because of its employee partnership model.) Online brokerage franchises drummed up new business too, adding $100 billion in new assets, Aite said. The report did not clarify how that money was broken out by channel.

“It is safe to assume that the post-crisis wealth management landscape in the United States will look nothing like it did just a few short years ago,” the analysts said.