Each year Spectrem Group tracks the top advisors of wealthy households, including Millionaires. While few providers have significant market share (the highest is 10%), the top three providers have been consistent throughout the years. This year there has been some change in the top three, however, only by a small margin.
In 2014, 2015, and 2016 Fidelity was identified as the top advisor for Millionaires. That remains true in 2017. In second place, in the same three years was Morgan Stanley and Wells Fargo was third. In 2017, second place is a tie among Edward Jones, Morgan Stanley, Merrill Lynch and Wells Fargo.
Primary advisor usage changes dramatically by age. Almost a quarter (24%) of Millennials identify Fidelity as their primary advisor. In contrast, only 10% of GenXers identify Fidelity as their primary advisor. They also use Wells Fargo (8%), Vanguard (6%) and Edward Jones (6%). While 9% of Baby Boomers identify Fidelity as their primary advisor, 7% choose Edward Jones and 6% choose both Morgan Stanley and Merrill Lynch. Similarly, 9% of the WWII generation use Fidelity as the primary advisor but 8% choose Wells Fargo and 6% rely on Morgan Stanley.
In our research, Spectrem defines the Primary Advisor as the firm one relies upon for advice about investments. Overall 73% of Millionaires use an advisor of some type. It’s interesting to note that Millionaire Millennials are more likely to use an advisor (87%) than Millionaire GenXers (61%). Many in the business might not define Fidelity as an “advisor”, however, the term is self-defined by investors. Additionally, many investors use the phone-based Fidelity services, or they may use an RIA that provides them statements via Fidelity….thus they believe the advisor is affiliated with Fidelity.
Spectrem also asks about the Primary Provider. The Primary Provider is the firm that holds the largest portion of the investor’s assets. They may not necessarily provide advice (although many do). For the past three years, and perhaps as far back as 2008, the top three Primary Providers have been Fidelity, Charles Schwab and Vanguard. Fidelity is always at the top while Vanguard and Charles Schwab switch around. The Primary Providers have remained consistent for 2017 with Fidelity remaining at the top with 35% and Vanguard coming in second at 11%. Charles Schwab retains third place at 8%.
Are there any companies that own the wealth management market? Fidelity has the largest market share, however, they still have only 10% of the total Millionaire market as advisors. Be prepared, however, as Millennials continue to favor companies such as Fidelity and Vanguard. Full-service providers need to determine how to win over this independent - yet open to advice – generation.