The recent sale by Ameriprise Financial of its Securities America advisory services has led to a new “buzz” on the street.

The big question: Is this a new wave of consolidation within the finance industry similar to what we witnessed over the past two years?

Two differing opinions were quoted by Dave Lindoff for OnWallSteet on August 17.

1. S&P asset management industry analyst Chris Maimone thinks there are more to come if equity volume continues to trend lower due to marginal economic data coming out, but the consolidation is likely to come from the smaller players who have less staying power and flexibility. (Unlike the recent Ameriprise Financial deal which was due mainly to their desire to focus on their own brand; plus they made a nice profit on the sale.)

2. Another opinion comes from Haywood Sloan, principal at Diversified Services Group, who thinks current consolidations are just aftermath of the huge wave we saw in 2009-10, and are more about growth, not shrinkage.

Paul Reilly, CEO of Raymond James agrees with Sloan, stating that financial companies today are more liquid and less leveraged, so expects fewer failures and consolidations.

However it plays out, brokers are still on the move.

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Morgan Stanley and Smith Barney brokers appeared hopeful last month when James Gorman, co-president of Morgan Stanley and chairman of the new joint venture, confirmed that there would be retention deals for both sides, with the “packages structured attractively in line with industry practice.”

The intent, of course, being to dissuade top brokers from leaving.

Many recruiters anticipated the retention deals to look a lot like those offered by B of A to Merrill’s brokers.

Our President and CEO, Bill Willis, cautions that the change in the political environment may result in limiting “over generous” packages, especially if the money comes from bailout funds.

When interviewed by Helen Kearney, reporter for On Wall Street, regarding this issue Bill expressed:

“It’s hard to conceive that Democrats will approve of paying stockbrokers who are perceived to be wealthy individuals, to stay at the firm.”

So, again the question comes back to us…will the brokers jump ship and where are they going to go?

A lot fewer options out there now, but in this economy, brokers are going to look for good product and technology for sure, and we see a lot of potential with some strong Regionals looking to grow and take advantage of our rapidly changing financial industry.

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UBS Wealth Management has joined other major firms including Merrill Lynch, Smith Barney and Morgan Stanley by setting up an Investment Center where financial advisors provide services over the phone for clients who have $1,000 to $250,000 in assets, reports Evelyn Juan, reporter for Dow Jones Newswires, on June 19, 2008.

Termed the “emerging affluent,” these clients are assigned a team of brokers who are trained to work specifically with this segment of investors.

The idea behind this move is that the most experienced financial advisors will work more with upscale clients.

What is your thinking on the pros and cons of this tactic?

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