Wirehouse Platforms: A Mixed Bag

The landscape for both global investment banks and wirehouses in general has seen dramatic changes from multiple angles over the past six years. The very definition of the term "wirehouse" and how it is applied has changed, as has the operating environment in which these organizations compete. The purposes of this evaluation and is to briefly discuss the platforms capabilities of four particular organizations and how they compare with one another today. None of Wells Fargo, UBS, Merrill Lynch or Morgan Stanley exist in a vacuum, and they certainly compete with more than just one another, yet they principally compare themselves with one another—as does the media. We will attempt to do that here.

Taking inventory of the platform nuts and bolts of each organization will put on display the value that they place on furthering the development of every advisor at their firm. The resources committed at each firm allowing advisors to service clients is the very essence of “doing business” on a day-to-day basis. Any advisor would say that this particular category is hugely important—and can be the difference maker in their perception of a firm's competence and culture.

Wells Fargo has found itself in an enviable position in this particular category. Based on the fact that Wachovia was acquired in a fire-sale manner, the advisor masses were simply delighted to be met with a platform and product structure that was certain to remain in place for the foreseeable future. Instead of facing possible insolvency (which Wachovia did at one point in the crisis), legacy Wachovia advisors appreciated the simplicity of Wells Fargo systems and the quick changes that were made in the integration. There were no headlines decrying platform issues or abnormalities, and advisors simply moved along with above-average technology and product access. Again, the satisfaction level of advisors was directly related to the issues that they faced as an organization in 2008-2009. Since platform changes were gradual and accretive to business, it ingratiated advisors to the Wells Fargo name and its operational capabilities. Today, the same dynamic remains and Wells advisors remain complimentary of their systems and product offerings. In a very esoteric way, the platform discussion on Wells is quite similar to its current culture: consistent and relatively unassuming.

Which brings us to Merrill Lynch and its current platform project and rollout. By the very nature of its timing (late compared to its peers), it could be considered to be in a compromised position. But the jury is certainly still out, and leadership has been strategic in its rollout. By avoiding a nationwide installation that could create innumerable problems that only become worse because of the size of the rollout, the firm has decided to slowly install Merrill One in strategic locations and limited regions. Executing the new platform distribution in phases allows for mistakes and glitches to be caught quickly and addressed without mass revolt and hysteria amongst advisors. This decision was a good one from any angle. A definitive opinion on Merrill One remains a mystery, though, as it is brand new and is only being used by a small percentage of advisors within the firm. One advisor who was engaged in the pilot program remarked, “It seems that they learned from the Morgan Stanley 3D debacle and made sure that the system was advisor friendly, as opposed to compliance friendly … we shall see if that remains true when in the hands of the entire work force.” As far as ease of use and practice accretive, the jury will remain out for a while.

UBS has found itself in a very similar situation to Wells Fargo, with a bit of a twist. Since there wasn’t any sort of merger or acquisition to deal with, the platform didn’t need to go through a giant teardown or rebuild. Over the last several years, the leadership instituted a “quick wins” program that directly affected the platform and its ease of use. One advisor stated, “The quick wins program was directly applied to ‘Is it easy or hard to do business at UBS’—and the early consensus was that it was more difficult than it should be. The gradual changes in the platform were focused on making it easier for advisors to do business.” Gradual changes—as opposed to shocks to the system—are always preferred, and played well with advisors and clients. There has been little to no drama on the platform front for years at UBS, and as you can imagine, that’s the way they like it. An executive at UBS commented, “Leadership isn’t a fan of drama, and the elements they can control are viewed through that prism—the advisor satisfaction with the platform and products are a source of pride.” With no larger platform or product initiatives on the horizon, UBS can claim firm footing in this category.

Morgan Stanley remains a complicated discussion when it comes to platform. While it can be argued that their product offerings—based on their robust investment banking operations—give them an advantage, the current iteration of their platform and the execution of its rollout have been challenging. The decision to navigate a nationwide compression of a new platform met with significant resistance from advisors and clients. As complaints poured in based on the system's reliance on compliance procedures and policies, it led to defections and anger. It could be argued that Morgan Stanley decided to execute the compression of the new platform nationwide because it was the last step in the Smith Barney integration. While understandable, it simply didn’t work out as planned. This is a tough area to remain objective about, as voices from all angles create a chorus that's difficult to navigate. One advisor explained, “You get used to anything if it is forced on your business—but that is the point, isn’t it—it was forced on us and was a nightmare for the first 6 months.” A former tech executive at the firm described it this way: “There were significant flaws from the get-go, and it took way too long to address them—but frankly, that is a function of the size of the organization—everything takes a bit longer when you’re the biggest.” While the noise from 3D has quieted and advisors have figured things out, it does remain a net negative based on lack of ease of use and the ill will it created when introduced. Still, the positive opportunities on the product side of this discussion mitigate the remaining issues with the platform to some degree.

Clearly, there is a certain amount of separation and diversity of process involved at each organization. UBS and Wells Fargo seem to have kept things simple and approached change in a measured fashion, while Morgan Stanley and Merrill Lynch have featured large-scale changes. While Merrill still has a sizable amount of their rollout ahead of them, their competitors have essentially solidified their platforms, dealt with negative feedback from their advisor forces and made the necessary adjustments. While Morgan went through a significant transition with 3D, it remains to be seen if Merrill will face the same difficulties. For the sake of clients and their advisors, let’s hope that isn’t the case.