Rich and Co.

Stock Broker Firms Cutting Back On – Everything

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It is realistic that, as returns on assets of all kind go down and uncertainty increases, financial services firms are going to focus on cutting support and increasing sales.  Not much else to do.

However, in our experience this conflicts with what clients want.  Clients want more services for turing over their assets – not less.



The big “wirehouses,” led by Merrill Lynch and Morgan Stanley, are also fending off challenges on several fronts, including:

  •  Declines in customer asset values over the past 12 months because of market conditions;
  • New “fiduciary” rules that could sharply raise the cost of handling customers’ retirement accounts.

    To combat dwindling assets under management from cratering portfolios, the wirehouses have moved fast, launching aggressive attempts to grow bigger margins and more profit from their financial advisers and wealth management businesses, sources say, by wringing out “excesses” on the expense side.

A source notes that brokers will see cutbacks in areas that advisers once took for granted — administrative support, office space, expenses, marketing and entertainment.

The wirehouses’ game plan, say analysts, is a massive asset gathering, with a focus on America’s wealthiest investors and relentless cost-efficiency….No cuts are off-limits, from eliminating office administration support to restricting the use of the photocopying machine.

“It’s all about gathering and preserving assets in this tough climate and saving money elsewhere to sustain profitability,” said this person.

Meanwhile, wirehouse brokers fear a new Labor Department regulation aimed at reducing conflict of interest in how advisers handle their clients’ retirement accounts will hit the books soon.

The banks expect the new rule to tie up brokers in expensive red tape. “This could be the straw that breaks the camel’s back for many advisers,”


Written by Rich and Co.

March 13, 2016 at 6:07 pm

Posted in Uncategorized

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