A little bit of forgetting can go a long way. With the events of the 2008 crisis and the near failure of a number of big Wall Street firms slowly receding in memory, financial advisors were feeling less panicky and more pleased with their employers in 2011. Registered Rep.'s 21st annual Broker Report Cards showed advisor satisfaction ratings creeping higher this year across the board — on everything from compensation and benefits, compliance support and sales support to products. Even research turned in higher grades. It helped that the markets continued to recover in 2011, even if they took a bit of a hit right around the time we were fielding our survey (Sept. 15 to Oct. 24). That means asset levels were higher this year. And, when asset levels rise, well, we all know what that means: Fees rise too.
Combine these ingredients, and you have a recipe for a little more optimism. “The year probably allowed them to get more comfortable with their environment,” says Aite Group analyst Alois Pirker. “And what we've seen this year is that the flow of assets has been better at the big firms. Even in a tough third quarter, we saw positive inflows of client assets. That creates a little more confidence in these firms.”
That's not to say that everyone is equally happy. Those firms that managed to avoid big investment banking and mortgage fiascos in recent years scored on top, with Raymond James & Associates, the full service arm of Raymond James, taking the top spot for the second year in a row, just ahead of perennial favorite Edward Jones. Firms with merger integration issues scored at the bottom of the heap. Morgan Stanley Smith Barney took the lowest grade again this year with a 5.7 (up from 5 last year). Wells Fargo Advisors, which scored a 6.4 (up from 5.7 in 2010), came in fifth place again.
Merger integrations are always disruptive for financial advisors. “The integration of two sales forces always creates trouble,” says Andre Cappon, president of the CBM Group, a consultancy. “Big producers tend to be prima donnas. If you put together two branches, one of the office managers disappears and producers feel they don't have someone looking out for them anymore. Multiply this by several hundred branches. Then you have to harmonize compensation. This is the number one topic. Every brokerage has a grid, and when you put together management, the one thing everyone wants to know is, why should this guy get paid X and I get paid Y? Then there are systems. Each set of brokers is used to a system, to certain computer screens, services they get, calling an 800 number when they have a problem.”
In fact, far more financial advisors at Wells and Morgan Stanley said integration issues are having a negative impact rather than a positive impact on their business, productivity and clients (See “Why Can't We Be Friends,” below) — even if these numbers show a big improvement over last year. At Merrill, the picture was more mixed, with FAs split nearly evenly on whether integration is positive or negative.
Todd Taylor, partner at Heidrick & Struggles, a global executive search and consulting firm, says the continued integration trouble is no big surprise. “These are complex mergers. A major component is cultural, which can take longer — organization changes, turnover, new people to know how to navigate, downsizing. The other component is technology. Morgan Stanley advisors have had to adopt new account opening procedures, while Smith Barney had older, server-based systems that caused a delay in getting them onto the new workstation.” What's more, these firms are working through integrations at the same time that they are trying to manage costs in an extremely challenging environment. “The key will be to get the pieces in place, including the technology platform, right-sizing support models for FAs, and making the best long-term talent decisions on who to keep and who to let go.”
UBS scored highest among the wirehouse firms, a marked improvement from two years ago when it ranked dead last. “Not surprising given the strength of their leadership team. That said, I believe that UBS is still in a honeymoon period of a sort with [UBS Wealth Management Americas CEO Bob] McCann,” says Taylor. “I believe McCann is essentially communicating the same vision to his FAs that Gorman did to Morgan Stanley advisors before the Smith Barney merger, and they are buying in — essentially that smaller is better for advisors and clients, and that UBS wants to be the best place for larger teams. This works to a point, but in the end, scale matters, which is why Morgan merged with Smith Barney.”
Should I Stay or Should I Go?
For close to a fifth of FA respondents, the independent path holds some allure: Some 18 percent of all respondents “considered” going indie in the past year. That's down considerably from 29 percent last year. But the numbers were much higher at the Wall Street wirehouse behemoths still working through integration pain. About 31 percent of Morgan FAs, 23 percent of Merrill FAs and 13 percent of UBS respondents said they had considered going independent. Meanwhile, a full 41 percent of Wells respondents said they had considered independence, though this could also have something to do with the fact that Wells has its own independent platform, FiNet. (See “Home is Where the Heart is,” below.)
And yet, to consider independence does not necessarily indicate a commitment to making a move: 93 percent of respondents said they are very or somewhat likely to be with their firm in two years, up from 89 percent last year. Most FAs also feel their firm is the best to work for. And, of those whose bonuses will expire in the next 12 months, the percent who are considering leaving mostly number in the single digits: 8 percent of Merrill FAs whose bonuses expire, 3 percent of Morgan FAs and 4 percent of UBS FAs. At Wells Fargo the number is higher, at 18 percent. (Wells says it did not actually offer retention to FAs when it acquired Wachovia, but it did expand its 4Front program, which provided financial incentives to FAs who were following a program designed to help clients through the market downturn. Wells speculates that some FAs considered this retention money.)
In fact, most respondents think the wirehouse channel is the best one to work for at 51 percent, up from 45 percent last year. The second-place favorite is the regional model at 24 percent, followed by independent b/ds at 9.4 percent, hybrid at 7.5 percent and fee-only RIA at just 1.5 percent.
“People don't want to leave. The wirehouses are a better brand still, or at least a brand that the customers recognize,” says Cappon. “If I call you and say, ‘I'm with broker/dealer X, Y, Z. I'm Andre Cappon,’ they're going to say, ‘Who the hell are you?’ So there is a value to those brands because it opens the doors. That hasn't changed.”
It's generally bigger guys, with more assets and higher production, who plan to stay at the wirehouses. And yet, separately, wirehouse FAs who like the hybrid and RIA models best also have the highest asset and production numbers. (See “Size Matters,” below.) This echoes what we wrote in our November story, “Indie Exodus, Overhyped?” Wirehouse firms have long argued that it is the smaller FAs who are leaving, while RIA firms and aggregators have countered that, in fact, they are pulling in the big gorillas, the guys managing over $100 million in assets. Turns out they're both right, though the differences in size really aren't that great.
“If you have a lot of assets you probably are an older broker and you are not going to want to rock the boat,” says Cappon. “Whoever is the new management will treat you better, do anything to keep you there. So there is very little pressure for you to leave. If you're a smaller broker, you see the writing on the wall. The firms say if you don't produce over $400,000 with three years length of service you're out anyway.”
Cross-Sell Crankiness
Cross-selling is king in the financial services world, and all of the brokerages owned by banks have been promoting cross-selling of banking products through their financial advisors. FAs are feeling the heat. This was reflected in scores for the “freedom from pressure to sell proprietary products or inventory” category. Whereas UBS, RJ&A and Edward Jones received grades in the 9s, Wells Fargo got an 8, Morgan an 8.3 and Merrill scored an 8.8.
In fact, 55 percent of Wells respondents said they had been pressured to sell clients banking and loan products, compared with 36 percent of Merrill respondents, 27 percent of Morgan respondents and 24 percent of UBS respondents. Of those who had been pressured nearly three-quarters said they went ahead and sold clients these products. Of those who sold the products, between 12 percent and 18 percent said that these sales had hurt their business.
Separately, products FAs said they are avoiding like the plague include: commodities, options, equity indexed annuities, variable annuities, leveraged and indexed ETFs, structured products, managed futures, and private placements.
Of note: Our repondents skew lower on the production totem pole. Nearly 40 percent of respondents at Merrill, Morgan and Wells, and around 30 percent at UBS, said they generate under $500,000 in annual gross production. The percent of respondents producing under $300,000 in annual gross production was generally in the high teens or low twenties, though our understanding has been that the wirehouses were letting such lower-end producers go or making it harder for them to survive by sticking them in the so-called penalty box. Indeed, a recent Cerulli survey showed that while the wirehouses have lost market share, average assets per FA was up 10 percent to $94.2 million in 2010. Their efforts to move upstream, cater to higher-net-worth clients and larger advisors, which are more profitable, seem to be working.
Being Numero Uno
Most advisors still believe their shop is the best place to work.
| Firm | % who believe their firm is the best to work for, 2010 | % who believe their firm is the best to work for, 2011 |
|---|---|---|
| Raymond James & Associates | 94% | 98% |
| Edward Jones | 85% | 94% |
| UBS Financial Services | 73% | 77% |
| Merrill Lynch (Bank of America) | 71% | 72% |
| Wells Fargo Advisors | 57% | 60% |
| Morgan Stanley Smith Barney | 45% | 53% |
How This Survey Was Conducted:
Between Sept. 15 and Oct. 24, 2011, Registered Rep. e-mailed invitations to participate in an online survey to 22,159 total advisors at the following firms: Edward Jones, Merrill Lynch, Morgan Stanley Smith Barney, Raymond James & Associates, UBS Financial Services and Wells Fargo. By Oct. 24, 2011, 1,764 completed responses were received from these six companies. Reps rated their current employers on 28 items related to their satisfaction. Ratings are based on a 1-to-10 scale, with 10 representing the highest satisfaction level. They were also asked additional questions about their firms.
Why Can't We Be Friends?
Advisors at Morgan Stanley Smith Barney and Wells Fargo are still working through integration issues. Merrill FAs seem to have moved on.
Impact Of Firm Integration On:
| Business | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Wells Fargo Advisors |
|---|---|---|---|
| Positively | 30% | 16% | 20% |
| Neutral | 36% | 31% | 31% |
| Negatively | 23% | 49% | 33% |
| Productivity | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Wells Fargo Advisors |
|---|---|---|---|
| Positively | 27% | 17% | 18% |
| Neutral | 32% | 29% | 26% |
| Negatively | 30% | 46% | 39% |
| Clients | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Wells Fargo Advisors |
|---|---|---|---|
| Positively | 29% | 16% | 18% |
| Neutral | 35% | 41% | 29% |
| Negatively | 24% | 33% | 36% |
Home is Where the Heart is
The overwhelming majority of advisors expect to stay put: Some 93 percent of respondents say it is very or somwhat likely they will be working for their current firm in two years. And yet, a large number of FAs at Morgan Stanley Smith Barney and Wells Fargo Advisors considered working for themselves at some point in the past year.
Q: Have you considered going independent in the past year?
| Edward Jones | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Raymond James & Associates | UBS Financial Services | Wells Fargo Advisors | |
|---|---|---|---|---|---|---|
| Yes | 13% | 23% | 31% | 9% | 13% | 41% |
| No | 87% | 75% | 68% | 91% | 87% | 58% |
| No reply | N/A | 2% | 1% | N/A | N/A | 1% |
| Firm | % very or somewhat likely to remain at firm two years from now | % very likely to remain at firm two years from now. |
|---|---|---|
| Raymond James & Associates | 97% | 93% |
| Edward Jones | 95% | 88% |
| UBS Financial Services | 95% | 78% |
| Merrill Lynch (Bank of America) | 87% | 72% |
| Wells Fargo Advisors | 88% | 64% |
| Morgan Stanley Smith Barney | 83% | 56% |
Size Matters, But Not as Much as You Think
Those wirehouse FAs who don't plan to move tend to manage more in assets and generate more revenue. But those who prefer the fee-only RIA or hybrid channels over others tend to manage the greatest assets. Still the differences are not great.
Top 4 wirehouse firms
| Avg. Production | Avg. AUM | |
|---|---|---|
| Overall average for group: | $749,113 | $95.30 |
| Switching | Avg. Production | Avg. AUM |
| Somewhat or very unlikely to be at current firm in 2 years | $664,286 | $89.60 |
| Somewhat or very likely to be at current firm in 2 years | $761,612 | $96.10 |
| Going Indie | Avg. Production | Avg. AUM |
| Have considered independence | $741,138 | $98.50 |
| Have not considered independence | $756,219 | $93.90 |
| Favorite Channel | Avg. Production | Avg. AUM |
| Fee-only RIA or Hybrid RIA is | $771,875 | $101.40 the best channel |
| Wirehouse is the best channel | $762,321 | $93.70 |
| Regional is the best channel | $706,707 | $98.30 |
| Independent B/D is the best channel | $764,407 | $98.00 |
And the Winner Is…
Raymond James & Associates took first place in Registered Rep.'s annual broker report card survey for the second year in a row, relegating Edward Jones once again to second place. Firms with integration issues from crisis-era mergers took the poorest scores.
Overall rating of experience at firm (Scored 1-10, with 10 highest)
| Average | Edward Jones | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Raymond James & Associates | UBS Financial Services | Wells Fargo Advisors |
|---|---|---|---|---|---|---|
| 7.6 | 9.1 | 7.2 | 5.7 | 9.3 | 7.7 | 6.4 |
Where's My Money?
Market improvements since the crash gave another little boost to the grades FAs gave to comp this year. The overall average rose to 7.2 from 6.8 last year. Perks and assistant bonuses took the lowest scores, but these were still much improved from last year.
Compensation and Benefits (Scored 1-10, with 10 highest)
| Average Rating | Edward Jones | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Raymond James & Associates | UBS Financial Services | Wells Fargo Advisors | |
|---|---|---|---|---|---|---|---|
| Cash compensation (payout grid) | 7.5 | 8.9 | 7 | 5.6 | 9 | 7.6 | 6.6 |
| Fairness and balance of payout on different products | 7.6 | 9 | 7.2 | 6 | 8.9 | 7.8 | 6.8 |
| Deferred revenue and other non-cash compensation | 7.4 | 9.1 | 6.8 | 5.5 | 9 | 7.5 | 6.4 |
| Health and retirement benefits | 7.5 | 8.3 | 6.8 | 6.8 | 8.8 | 7.9 | 6.5 |
| Perks (parking, expenses covered, etc.) | 6.3 | 8.4 | 5.3 | 4.7 | 8.5 | 6.1 | 4.9 |
| Assistant bonuses from the firm (not from the advisor) | 5.9 | 9.1 | 5.7 | 3.6 | 8.2 | 5.3 | 3.2 |
| Overall rating of compensation and benefits | 7.2 | 8.9 | 6.6 | 5.6 | 9 | 7.1 | 6.1 |
Bosses and Paperwork
Management and compliance are often sources of advisor discontent. This year, average scores for all firms rose a hair for overall management performance (up to 7.5 from 7.2) and overall compliance (up to 7.2 from 7.0). Ratings for morale and senior management were low at Morgan Stanley Smith Barney and Wells Fargo, but much improved from last year.
| Management (scored 1-10, with 10 highest) | Average Rating | Edward Jones | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Raymond James & Associates | UBS Financial Services | Wells Fargo Advisors |
|---|---|---|---|---|---|---|---|
| Your branch manager | 8.2 | 9.1 | 7.8 | 6.9 | 9.1 | 8.3 | 7.7 |
| Senior management | 7.4 | 9.1 | 6.7 | 5 | 9.3 | 8 | 6.2 |
| Strategic focus | 7.5 | 9.1 | 6.8 | 5.4 | 9.4 | 8.1 | 6.4 |
| Overall ethics | 8.3 | 9.6 | 7.9 | 6.7 | 9.7 | 8.2 | 7.6 |
| Public image | 7.4 | 9.5 | 6.1 | 6 | 9.6 | 6 | 7.2 |
| Morale | 7.1 | 9.1 | 6.3 | 4.9 | 9.5 | 6.9 | 5.8 |
| Average performance | 7.5 | 9.3 | 6.8 | 5.3 | 9.5 | 7.4 | 6.4 |
| Compliance support (scored 1-10, with 10 highest) | |||||||
| Risk management | 7.5 | 9.3 | 6.9 | 6.3 | 9.3 | 6.9 | 6.5 |
| Compliance-specific training | 7.8 | 9.1 | 7.5 | 6.5 | 9.2 | 7.7 | 6.6 |
| Reduction of administrative burden (time and effort) | 6.5 | 8.8 | 5.8 | 4.2 | 8.8 | 6.8 | 4.6 |
| Average rating of compliance support | 7.2 | 9.1 | 6.7 | 5.6 | 9.2 | 7.2 | 5.6 |
Help Me Make It Through the Month
Overall, advisors at most brokerages are pretty satisfied with sales support, products and services. The category that received the weakest marks was quantity of sales assistants. At Wells Fargo Advisors, clarity of account statements and quality of investment research also took low grades, while ongoing training and quality of technology/advisor work station suffered at Morgan Stanley Smith Barney. Edward Jones scored low on access to alternative investments.
| Sales support: Training and resources (Scored 1-10, with 10 highest) | Average Rating | Edward Jones | Merrill Lynch (Bank of America) | Morgan Stanley Smith Barney | Raymond James & Associates | UBS Financial Services | Wells Fargo Advisors |
|---|---|---|---|---|---|---|---|
| Quality of sales assistants | 8.6 | 9.5 | 8.6 | 7.8 | 9.4 | 8.4 | 8.0 |
| Quantity of sales assistants | 7.7 | 9.6 | 6.9 | 6.0 | 9.3 | 7.6 | 6.7 |
| Ongoing training | 7.8 | 9.2 | 7.4 | 6.0 | 9.3 | 7.5 | 7.3 |
| Quality of technology/advisor workstation | 7.7 | 8.9 | 8.4 | 6.0 | 8.5 | 7.4 | 6.9 |
| Clarity of account statements | 7.9 | 9.2 | 8.1 | 6.4 | 9.1 | 8.1 | 6.2 |
| Client access to online account information | 8.6 | 9.4 | 8.8 | 7.6 | 9.3 | 8.7 | 7.5 |
| Resolution of client account problems | 8.1 | 9.5 | 8.2 | 6.6 | 9.5 | 8.2 | 6.8 |
| Access to in-house estate planning and wealth management experts | 8.2 | 8.8 | 8.3 | 7.0 | 9.4 | 8.4 | 7.0 |
| Access to in-house investing experts | 8.2 | 9.0 | 8.2 | 7.2 | 9.5 | 8.6 | 6.9 |
| Overall rating of sales support: training and resources | 8.0 | 9.3 | 8.0 | 6.4 | 9.4 | 8.2 | 6.9 |
| Products and research (Scored 1-10, with 10 highest) | |||||||
| Quality of investment research | 8.1 | 8.7 | 8.2 | 7.2 | 9.3 | 8.3 | 6.7 |
| Range of products offered | 8.9 | 8.7 | 9.1 | 8.3 | 9.4 | 9.1 | 8.6 |
| Quality of products offered | 8.7 | 9.3 | 8.8 | 7.6 | 9.5 | 8.7 | 8.1 |
| Access to alternative investments | 8.3 | 7 | 8.8 | 8.2 | 9.3 | 8.9 | 7.8 |
| Asset allocation programs | 8.7 | 9.2 | 8.7 | 7.9 | 9.4 | 8.6 | 8.2 |
| Freedom from pressure to sell proprietary products | 9.0 | 9.8 | 8.8 | 8.3 | 9.9 | 9.3 | 8 |
| Overall rating of products and services | 8.6 | 9.1 | 8.6 | 7.7 | 9.5 | 8.9 | 8 |
Edward Jones: Still Carrying the Torch
Edward Jones' decision in 2010 to raise production expectations for its advisors certainly had an impact. It's no surprise that there are fewer advisors at the firm; 11,700 at the end of September, down by about 900 from the preceding year, as lower producers fall off the Jones map. But the remaining advisors are more profitable. Ed Jones has seen average annualized production per advisor rise 23 percent this year, to $298,000, according to data released by the company. Average AUM per advisor was up as well: $46.4 million at the end of September, up nearly 5 percent year over year.
The higher production bar, along with tougher rules affecting payout, doesn't appear to have dimmed the enthusiasm that the average Jones advisor feels for the firm. More than 600 Ed Jones advisors ranked their firm in this year's Broker Report Card, and their scores placed the firm just behind Raymond James & Associates for overall firm experience and well ahead of the four wirehouses (a repeat of last year). Ninety-four percent of Jones' advisors said their firm was the best to work for, while 88 percent said it was “very likely” they would remain at the firm two years from now.
Among the advisors who praised Ed Jones in the write-in section of the survey (the encomiums amounted to nine pages on our printout), many similar themes emerged: satisfaction with the partnership structure of the company; a supportive business culture; freedom and flexibility in running their offices; and principled management practices. “I have never been ashamed of something my company did,” wrote one advisor who said he left a wirehouse 20 years earlier which no longer exists. “We were ridiculed during the go-go times for being less than sophisticated, yet our conservative and consistent approach did not cause us to need bailout money.”
But the conservative approach still bothers a few in the ranks. As it did last year, Ed Jones placed dead last among the six firms in access to alternative investments. “They restrict sales in everything except the most mainstream investment types,” one advisor wrote. — Jerry Gleeson
Note: An earlier version of this story incorrectly reported Edward Jones' new client assets as $17.4 billion. That figure is net new assets from new clients, Jones said.
Edward Jones
Share price: NA
Pre-tax operating income, Q1-3: $357.7 million
Net revenue, Q1-3: $3.4 billion
Total U.S. client assets under care (9/30/11): $543.4 billion
New Client Assets in U.S. YTD Sept. 2011: $20.1 billion
Number of advisors, Q3: 11,700
Avg. annualized production per advisor: $297,977
Avg. AUM per advisor, Q3: $46.4 million
Merrill Lynch: Less Thunder in the Herd
The thundering herd is a little blasé these days. Merrill Lynch financial advisors aren't generally thrilled with their firm but they aren't full of loathing either. With an overall score of 7.2 this year, Merrill ranked slightly below the average for all firms and right in line with it's own 2010 score. In fact, Merrill was the only firm of the six ranked that didn't see its overall grade or any of its individual category scores pop higher in 2011. The score for management actually fell a hair, to 6.8 from 6.9.
This may reflect a focus on expenses and recent management shakeups at the firm. The second phase of Bank of America's cost-cutting plan, Project New BAC, began in the Fall and will affect Merrill, among other divisions. Meanwhile, Sallie Krawcheck was ousted as head of wealth management in September and replaced with former commercial banker David Darnell. Some management changes, though, should give FAs heart: A number of new client segement and market heads in the wealth management biz are former financial advisors, a sign of the bank's respect for the Merrill way.
Among wirehouse firms, Merrill came in second behind UBS, and well ahead of the other firms who merged during the market crisis in 2008 and 2009, Wells Fargo and Morgan Stanley Smith Barney. Relative to Wells and Morgan, Merrill has been pretty much been left alone inside of Bank of America.
“Merrill really doesn't have an integration going on,” says Aite Group analyst Alois Pirker. “It has its own platform, it used it before, and it's still using it. The big change for Merrill was at the beginning where they had to get used to becoming one part of the big empire rather than being the empire themselves,” he says.
About 72 percent of Merrill FAs continue to believe that the firm, which has long cultivated a culture of winning, is the best out there. And 87 percent expect to be there in two years. Says one FA in write-in comments: “Clients are thrilled, platform availability is incomparable, no pressure to sell our own products, back house support is phenomenal, managers are helpful, and collaboration with the bank has opened the door to countless opportunities.” — Kristen French
Merrill Lynch
BAC share price (22 Nov.): $5.37
Net income (Q1-Q3)*: $1.38 bn
Net revenue (Q1-Q3)*: $13.23 bn
Net new client assets (Q1-Q3)*: $10.2 bn
Total client AUM (Q3): $1.5 tn
Number of advisors (Q3): 16,700
Avg. annualized production per advisor (Q3): $854,000
Avg. AUM per advisor (Q3): NA
*BofA Global Wealth and Investment Management
Morgan Stanley Smith Barney: (I Can't Get No) Satisfaction
Morgan Stanley Smith Barney advisors are a little down and out. Their dissatisfaction is understandable. The firm is going through a complicated integration following the 2009 merger of the Morgan Stanley and Smith Barney retail brokerages, two wealth management giants with plenty of overlap, and Gregory Fleming, who heads up the wealth management business, is keenly focused on expense management. The firm got poor marks this year, with an overall grade of 5.7 out of 10, putting Morgan in last place among the six ranked for the second year in a row.
Some FAs have new managers to report to, which can be disorienting. Legacy Morgan Stanley advisors have just been introduced to a new web-based technology platform called 3D and legacy Smith Barney advisors will get the rollout next. And while new tech rollouts are always tough, this one has suffered plenty of glitches. MSSB FAs say all the upheaval hurts. Some 49 percent of respondents feel the integration is having a negative impact on their business and some 46 percent said it is having a negative impact on their productivity.
They also want more money — for themselves and their assistants. Many of those categories receiving the absolute worst marks were in the compensation category: cash compensation, deferred revenue, perks. Assistant bonuses took away a dismal 3.6, the lowest score of the entire survey. Meanwhile, compliance burden and morale were also at the bottom of the barrel. Of note: respondents were split almost half and half between Morgan Stanley (45 percent) and Smith Barney (54 percent).
Is the integration pain great enough for FAs to leave? That's unclear. Only 53 percent said they believe it is the best firm to work for. But 83 percent said they are somewhat or very likely to remain at the firm in two years. “The direction of the firm, the roll out of new systems, the completion of the MSSB merger…all looking outstanding in the next 6 months,” wrote one satisfied FA. — Kristen French
Morgan Stanley Smith Barney
Share price (22 Nov.): $13.52
Net income (Q1-Q3): $1.03 bn
Net revenue (Q1-Q3): $10.2 bn
Net new client assets (Q1-Q3): $15.5 bn
Total client AUM (Q3): $1.6 tn
Number of advisors (Q3): 17,291
Avg. annualized production per advisor (Q3): $747,000
Avg AUM/advisor (Q3): $90 mn
Raymond James & Associates: Double Take
They've done it again. Raymond James & Associates, which was first included in our survey in 2010, stole the top spot in employee satisfaction for the second year in a row. RJ&A reps are clearly pretty happy where they are, with 93.1 percent saying they will very likely still be working for the firm two years from now, the highest percent of FAs compared with the rest of the firms. According to the company, regrettable attrition, which includes those who produce more than $300,000 a year and leave for a competitor firm, is at 0.99 percent. Advisor headcount is up 3.6 percent from last year.
One thing keeping brokers in their seats is that they truly own their book of business, says recruiter Danny Sarch of Leitner Sarch Consultants Ltd. in White Plains, N.Y. Many of the bigger firms will go after the rep's clients if they leave, but RJ&A puts it in writing that it won't. The culture of the firm flows from that starting point, and this independence really resonates with the FAs, Sarch says. “It's an acknowledgement that the relationship is between the advisor and the client, and the firm tries to facilitate that.”
When asked why they're very likely to stick with the firm, one RJ&A rep wrote in: “Great culture and values and truly entrepreneurial in understanding that the FA owns the book and that client service is the key to a successful FA and firm.”
“Advisors love the firm's culture, which offers greater flexibility than the wirehouses, greater access to senior management, and true independence because advisors own their own book of business,” says Mindy Diamond, president and CEO of Diamond Consultants.
It also helps that RJ&A hasn't been in the headlines much, Sarch says. The b/d has had its issues, for example, with auction rate securities, but it didn't face the same kind of mortgage disasters that the big Wall Street firms did, and it wasn't forced into a shotgun marriage with another firm. RJ&A remains fiercely independent, he adds. In fact, RJ&A took home the top ranking for public image in the survey, with a 9.6 out of 10. — Diana Britton
Raymond James & Associates (RJF)
Share price (22 Nov.): $37.11
Net income (fiscal 2011): $278 mn
Net revenue (fiscal 2011): $3.3 bn
Total client AUM (9/30/11): $85.1 bn
Net new client assets (9/30/11): +4.4%
Number of advisors (9/30/11): 1,311
Average annualized production per advisor: $543,000*
Average AUM per advisor (9/30/11): $69 mn*
*Does not include trainees and recent experienced hires
UBS: Dismissing the Headlines
Blame it on Kweku. In this year's Broker Report Card, UBS Wealth Management Americas received a lower ranking versus last year in only one single category — public image. That's probably attributable to a particularly bad bit of timing. The survey went out Sept. 15, the same day that WMA's global banking parent announced that London trader Kewku Adoboli had racked up losses that ultimately amounted to $2.3 billion, leading to the resignation of CEO Oswald Grübel. The bad news raised fresh questions about how well the Swiss banking giant had put earlier troubles behind it, including the necessity of a government bailout following the 2008 financial crisis. It certainly fed a fresh round of rumors, persistently denied by UBS top management, that WMA might be sold.
Despite the latest black eye, however, the 103 UBS brokers who responded to the survey have a much higher opinion of their employer in 2011 than they did in 2009, when UBS received the worst grade of any firm in our survey. This year, UBS scored the highest in overall experience of the four wirehouses rated in the report card. More than three-quarters of the UBS brokers said they believe it is the best firm to work for, again outdistancing its three competitors (although it placed well behind Raymond James Associates and Edward Jones on this score.) Nearly four out of five UBS brokers said it was “very likely” they would remain with the firm two years from now; fewer than a third of the brokers who elaborated on their reasons cited retention bonuses or dissatisfaction with alternatives as the cause for staying put.
Advisor satisfaction is up by other metrics as well. UBS said its advisor attrition rate of 3.1 percent was the lowest in six years.
WMA management acted quickly after news broke about the September trading debacle. Its leader, Bob McCann, sent a memo to advisors praising them for their “dignity and grace” amid the discouraging headlines. Bob Mulholland, who leads the wealth management advisor group, followed up with a conference call with branch managers to offer similar sentiments. — Jerry Gleeson.
UBS
Share price (21 Nov.): $11.15
Pre-tax income (Q1-Q3): $449 mn
Net revenue (Q1-Q3): $4.5 bn
Net new client assets (Q3): $4.8 bn
Total Client AUM (Q3): $715 bn
Number of advisors (Q3): 6,913
Average annualized production per advisor (Q3): $895,000
Average assets per advisor (Q3): $103 mn
Wells Fargo Advisors: Cross-Sell Crankiness
Like every full service brokerage in Registered Rep.'s Broker Report Card this year, Wells Fargo Advisors generally found itself with higher grades than it saw last year. And yet, despite the uptick in performance, Wells still ranked second to last among brokers' overall ratings of their experience at firms, just as it did a year ago. Wells' overall rating of 6.4 was well below the average of 7.6, although Wells found itself — once again — ahead of Morgan Stanley Smith Barney. Just three out of five Wells advisors said their company is the best to work for.
It may be that the culture clash between bankers and brokers still roils the waters at Wells Fargo. Of the 282 advisors who participated in the survey, 43 percent said they previously worked at A.G. Edwards, the longtime independent brokerage that was acquired by Wachovia Securities, which was itself acquired by Wells Fargo & Co. following the 2008 crash. The parent bank strongly promotes cross-selling of bank services across all platforms, a practice that rankles many advisors who feel it interferes with their client relationships. In the category, “Freedom from pressure to sell proprietary products or inventory,” WFA advisors rated their employer an “8” — placing them dead last behind the other five brokerages.
“Lending lending lending — they want bank tellers not financial advisors,” wrote one disgruntled advisor who indicated plans to leave within a year. “Bank brokers are paid to steal our accounts, management doesn't care about clients or FAs, just what fees it can add on accounts.”
That said, nearly two-thirds of WFA advisors said they were “very” likely to remain at the company two years hence. But that doesn't necessarily constitute a rousing endorsement of management; many spoke of contracts and retention bonuses that keep them in place, while others said they see few differences among the wirehouses. Some advisors dismissed the transition issues. One who works with Wells Fargo Private Bank said WFA “benefits greatly” from the bank relationship. — Jerry Gleeson.
Wells Fargo Advisors
Share price (21 Nov.): $24.18
Pre-tax income (Q1-3)*: $1.56 bn
Net revenue (Q1-Q3)*: $9.12 bn
Net new client assets (Q1-Q3): NA
Total Client AUM (Q3): $1.28 tn
Number of advisors (Q3): 15,188
Average annualized production per advisor (Q3): NA
Average AUM per advisor (Q3): $71.9 mn
* Wells Fargo's Wealth Brokerage Retirement unit, including WFA.
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