STREET MOVES:Ameriprise Nabs 500 Brokers,Many From Major Firms
09 September 2009 - 11:35PM
Dow Jones News
While major brokerages are focused on pursuing and retaining
top-tier financial advisers, Ameriprise Financial Inc. (AMP) is
snagging the ones left behind - those who work right in its "sweet
spot."
Ameriprise's Advisors Group, which includes both employee and
independent advisers, has recruited more than 500 brokers so far in
2009, many of whom joined from larger peers such as Morgan Stanley
Smith Barney.
Ameriprise mostly targets mass affluent clients, those who have
between $100,000 and $1 million in investable assets. Typically,
major firms, known as wirehouses, also attract these investors, but
are shifting toward servicing the richest of the rich.
The four major firms are still molding together big brokerage
forces acquired during the financial crisis. Such integrations as
well as plunging equity markets earlier this year, led these firms
to shed advisers in their lower-producing brackets. Ameriprise is
one place these advisers are finding a home.
The Minneapolis firm, which boats roughly 12,500 advisers,
completed its acquisition of H&R Block Inc.'s (HRB) advisory
business in November and has plans to further build up its
brokerage force.
"We are in an industry where dislocation will be remembered
forever," said Don Froude, president of Ameriprise's Personal
Advisors Group. "In terms of recruiting, this is probably the best
year we have ever had."
"We are recruiting advisors who work within our sweet spot,
which are the affluent and mass affluent markets," Froude said.
That expansion began in 2008, when larger competitors were
teetering and losing clients' confidence. According to a July
report from research firm Aite Group, self-clearing retail
brokerage firms outside the wirehouses added 3,000 advisers last
year alone. Edward Jones topped that list, adding more than 50% of
these brokers, while Ameriprise hired 18%.
"The wirehouses have too many brokers right now. They want to
lock in certain brokers, but others they don't want," said Alois
Pirker, research director at Aite Group.
Morgan Stanley Smith Barney has 18,500 advisers, while Bank of
America Corp.'s (BAC) Merrill Lynch has roughly 15,000. Wells Fargo
& Co. (WFC) boasts roughly 15,500 and UBS Wealth Management US
has about 7,900.
"Firms like Edward Jones and Ameriprise tend to take a lot of
the smaller (producing) brokers. For those guys, those firms are a
good fit," Pirker said.
The average broker at Ameriprise produces about $270,000 in fees
and commissions, while those from H&R Block are slightly
higher, with $300,000 in annual production. By comparison, the
average wirehouse adviser has between $500,000 and $600,000 in
production.
"We know that many of the advisors we have recruited from the
wirehouses have already increased their books of business, improved
client satisfaction and are developing deeper relationships through
financial planning with their clients," Froude said.
Dennis Gallant, president of GDC Research, which does consulting
and research for financial-services firms, says although the
wirehouses' shift toward high-producers makes places like
Ameriprise attractive, he worries about potential side effects for
the industry.
"It's not a bad strategy, but if everyone goes affluent the
firms will be saturated. But, we're not there yet," he said.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173;
brett.philbin@dowjones.com