The “Thundering Herd” is shrinking

The “wirehouses” (the industry term for major investment firms like Merrill Lynch known as the “Thundering Herd”) are continuing to lose brokers. There has been a 12% decline in headcount since 2008 according to Cerulli Associates in 2014 the trend continued.

What does this mean for investors at these firms? First, quite a few have lost the advisors they were working with. Clients who stayed with these firms were assigned another advisor. Others may have moved to independent firms if their brokers stayed in the business.

The bottom line is that the wirehouses have struggled to regain their financial footing after the crash of 2008. They did this by reducing headcount, by increasing fees, and by encouraging their brokers to sell more aggressively.

They have also focused on the ultra-high net worth clients and actively discouraged their broker/”advisors” from dealing with investors with less than a quarter-million dollar accounts. This, of course, provides an opportunity for the independent RIA (Registered Investment Advisor) community.

So while the Thundering Herd has been shrinking, the RIA community has been growing. And according to Cerulli they are even getting a growing share of the high net worth clientele.

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