There is probably no greater evidence of how the managed accounts sponsor world has changed then the recent statistics released about the growth of the Schwab managed accounts platform vis-a-vis its competition:
* According to Cerrulli Associates, the Schwab managed accounts platform has had the highest growth rate of the top 10 programs this year;
* It is currently the 5th largest platform, and accounted for 52% of the $6 billion total of net new flows during the first six months of 2010; and
* At $44 billion, the Schwab managed accounts platform has increased its AUM by 31% over the past year.
And, UBS at $48 billion in managed accounts AUM and Wells Fargo at $49 billion in managed accounts AUM, are certainly in danger of being surpassed by Schwab if the current growth rates continue.
While the wirehouses have fought back over the past year, they still are the favorite targets of both media criticism and of the recruiting efforts of RIAs and hybrids. And the bank programs are still suffering from the problems that their parents are experiencing.
These numbers are illustrative of two main points:
1) The quality of advisor leaving the established wirehouses and banks continues to increase (as advisors who participate in the managed account world typically have larger and more stable books of business); and
2) It won’t be long before Schwab becomes one of the, if not the largest managed accounts sponsor.
I am not forecasting the death of traditional broker/dealers. They will continue to be successful and they will continue to have top quality advisors. They will just become the bottom 5 of the top 10 rather than the top!
