The industry's top executives shared their strategies for success with On Wall Street just as Morgan Stanley reported client assets had fallen, dropping to $1.925 trillion in the third quarter from $2.003 trillion from a year earlier. That mirrors a similar decline at Merrill Lynch, which reported that client assets shrank to $1.942 trillion from $2.004 trillion for the year-ago period.
Clearly, there's no place for complacency these days, and the biggest wealth management players anticipate changes by regularly adjusting their strategies.
Along with discussing the leveling off of asset growth for some firms, Senior Editor Andrew Welsch writes in this month's cover story about the impending retirements of about one-third of all advisors in the coming years and about the pressing need for firms to train new recruits. In addition, robo advisors also aren't going anywhere; interest in automation is only getting stronger.
On Wall Street spoke with 11 executives from the wirehouses and largest regional broker-dealers. They say they are developing and executing strategies to navigate these challenges. Reading through the Q&As reveals strategies that differ widely. For example, firms are split on automation.
Taking a pass for now on robos are Raymond James and Edward Jones, two firms that hang their franchises heavily on the one-on-one of the client-advisor relationship. "We think we offer value in guidance and advice. An 800-number and algorithm aren't going to replace our folks," Edward Jones' Jim Weddle says.
Then there are firms that see the value of using robo advisors to engage millennials. Wells Fargo's Mary Mack is among them, but she's not suggesting replacing advisors: "I think it's a really important companion for the full-service business."
As for recruiting, Chip Packard, co-head of wealth management in the U.S. at Deutsche Bank, speaks of progress. "We've grown about 20% here in the U.S., so we've been keeping pace or even growing faster than the rest of the world, which is an indication also of the bank's commitment and willingness to invest in this franchise in the Americas region," he explains.
However, the bank's commitment was put into question about two weeks later when sources indicated Deutsche was in talks to sell its brokerage to Raymond James. Deutsche also revealed a major restructuring that included the replacement of its head of wealth management. That simply is the nature of the times, where challenges emerge and plans change.
The industry's biggest execs offer a picture of how their firms are adapting. However, they know that no plans should be carved in stone.