While the talk on Wall Street is about a decline in the number of stockbrokers, Orange County’s largest broker-dealers are coping.
The 30 firms actually added 47 financial representatives over the past year, a 2.6% increase to 1,832, based on the Business Journal’s annual list of financial advisers/brokers.
“A lot of brokerage houses have moved away from commission-based and more towards financial planning,” said Jerry Braakman, chief investment officer at First American Trust, which has $1.5 billion assets under management and works with a variety of OC brokers.
“Even some traders we use on our institutional side are more and more getting away from being pure traders and are becoming more often solutions providers.”
• Many of the representatives at our list’s No. 2, Bank of America Corp. unit Merrill Lynch Wealth Management, are wealth managers rather than traditional transactional brokers, said Carole Wentz, who oversees its Irvine office.
Merrill Lynch added 10 registered representatives for a total of 260 for the year ended May 31.
“We’re seeing fairly robust growth in Orange County,” she said.
The firm is experiencing higher demand for representatives from female, millennial and baby boomer clients, plus business owners who are retiring, she said.
The industry, in addition to being impacted by fewer advisers being used for stock trades, is facing the rise of robo advisers, whose algorithms provide investment strategy.
Merrill Lynch is beefing up its own technology to provide customer service wherever clients are, Wentz said. While robo advisers are more prevalent than a decade ago, she said clients still want to see advisers.
“This is still a people business. They want people who can talk through the complexities. Robo advisers cannot replicate the value of a personal finance adviser.”
• Wells Fargo & Co. maintained the top ranking, though its number of representatives declined by five to 312.
“Generally, the Orange County market remains very strong,” said Christopher Rommel, the bank’s chief wealth manager in the county.
“Specifically, we are still seeing activity around commercial real estate, although that is slowing,” he said. “The mortgage market is still strong, although rates have ticked up. Additionally, we are seeing a lot of movement around mergers and acquisitions. Tax law changes have been a major focus, especially with business owners.”
Like other firms, Wells Fargo is deploying more technology-based applications, such as its Intuitive Investor, to provide asset allocation, automatic rebalancing, and tax harvesting for do-it-yourself investors.
“I think it is a great product, and it starts by asking six questions that gauge the user’s risk tolerance,” Rommel said.
The List
This week’s list ranks broker-dealers, which can include wealth managers, based on the number of registered representatives in their OC operations. A registered representative is a licensed professional who trades securities, such as stocks, bonds and options, on behalf of clients for a fee or commission. Firms must have five registered advisers in order to make the list.
This week’s Special Report also includes a directory of registered investment advisers, who generally provide advice and don’t trade stocks or bonds (see separate articles).
Representatives typically work for a broker-dealer company registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority. A registered representative is required to pass the Series 7 and Series 63 qualifying examinations.
The list also includes firms’ number of offices in OC and companywide, though those figures don’t affect the rankings.
The firms on the list combined to employ about 5,492, down about 11%. Much of the decline can be attributed to a reorganization at Wells Fargo, which moved some units out of the county.
The list shows the number of offices in Orange County actually rose by 10 to 293.
A total of 16 firms increased their number of registered representatives; seven cut representatives; one firm reported no changes; and the rest are Business Journal estimates.
The largest five firms accounted for 1,056 of the registered representatives on the list, or about 57%.
Other Notables
• No. 9, Northwestern Mutual, boosted its Irvine office by 10, a 25% jump, to 50 representatives.
• Other increases include No. 5, Anaheim-based Centaurus Financial Inc., up eight representatives to 124; No. 6, Fidelity Investments, whose Irvine office added six advisers to reach 86; and No. 7, Raymond James’ San Juan Capistrano office, which hired seven for a total of 72 advisers.
• No. 8, Roth Capital Partners LLC in Newport Beach, reduced its representatives by five, leaving it with 61.
Chief Executive Byron Roth told the Business Journal in April that the brokerage industry is facing tough times due to falling fees.
• No. 3, UBS Financial Services Inc. in Newport Beach, cut its number by seven to 185.
