The industry gets a detailed look at the health of the wirehouses once they report quarterly earnings. In the latest reporting period, advisor productivity was on the rise.
UBS led the way among the biggest wealth management firms in terms of production, but the firm also shed the most advisors. Morgan Stanley, meanwhile, continued to maintain the largest headcount. Profits slipped at Bank of America Merrill Lynch, allowing another wirehouse to pass the firm in terms of profitability.
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Although the firm lost advisors last quarter, UBS continues to have the most productive advisors. The firm said that revenue per advisor stood at $1.091 million per advisor at the end of the fourth quarter.
Merrill Lynch was not far behind, however, reporting $1.07 million per advisor.
Wells Fargo does not provide data on advisor productivity.
Morgan Stanley continued to field the largest advisor force, though the number slid slightly, falling to 16,076 from 16,261 from the prior quarter. UBS, however, experienced a larger drop, shedding more than one-hundred advisors to drop to 6,997.
In a statement, a spokeswoman said that the current headcount was consistent with the firm's goal of an advisor force in the 6,500-7,000 range.
"In [4Q 2014], more than two-thirds of the advisors who left UBS were in the lowest producing two quintiles or not ranked at all. By contrast, three-quarters of the experienced advisors we hired in [4Q 2014] were ranked in the top two quintiles," the spokeswoman said.
Bank of America said that profits for its wealth management division, which include Merrill Lynch and U.S. Trust, fell 9.2% for the fourth quarter.
Bank of America CEO Brian Moynihan said during a conference call with analysts that the rise in expenses was due to "higher, performance-based incentives."
Bank of America's wealth management division continued to report the highest revenues, at $4.6 billion.
The division is comprised of Merrill Lynch and U.S. Trust, the company's elite brokerage unit which serves ultrawealthy clients.
U.S. Trust reported that fourth quarter revenues dropped to $758 million from $762 million for the year-ago period, a 0.5% decrease. Client balances at U.S. Trust grew to $387 billion for the quarter from $376 billion from the year-ago period, a 3% increase.
UBS Wealth Management Americas costs climbed 7% year-over-year, climbing to $1.7 billion for the quarter from $1.6 billion. The increase was due in part to higher financial advisor compensation, which increased 10% year-over-year, rising to $757 million. Compensation costs for recruited advisors also rose, rising to $187 million from $175 million, a 7% increase.
"I think that compensation for new recruits tells a story as well. It has gone up, and it shows that they are focusing laser-sharp on the high-end advisors. To get them in they are paying a lot," says Alois Pirker, research director at Aite Group.
Pirker adds, "The thinking is that you get the best recruits, you get high productivity, and average production has gone up, and you'll get more at the bottom line." Revenue grew 4%, reaching $1.92 billion from $1.85 billion.
Merrill continues to have the highest amount of total client assets, but Morgan is not far behind. The difference between the two wirehouses has narrowed to $11 billion.
- Wealth Management Profits Up 5% at Wells Fargo
- BofA Wealth Management Profit Drops 9.2%
- Morgan Stanley Wealth Management Reports Record Revenues
- Advisor Headcount, Profits Fall at UBS
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