Over the past several decades, I have managed the dramatic change in the wealth management industry for our clients. These changes have been quite favorable for the Wells’ advisors and their clients, which are reflected by the dramatic growth of our business.  The evolution began on Black Monday, October 19, 1987. This was a defining moment that foreshadowed an impending, fundamental change of our industry.  Major Wall Street firms were not prepared to deal with the crash.  Their clients were simply not educated or warned of the indicators that were present and as a result, could not sell positions on a timely basis. Discount brokerage firms only provided execution. They did not give advice. The bear market that followed was challenging for clients and firms alike. It was the smaller, more agile independent firms, like Wells, that retained their clients by offering:

Actionable advice

Lower costs than the large wire house firms

        Unbiased Advisors that were not mandated to sell proprietary products

The 1987 market crash led to a migration of investors away from well-known large brokerage firms, otherwise known as wire houses.  Investors that were using the “do- it-yourself” approach flocked back to advisors to seek professional guidance. From 1995 to 1999 money was back in the market in a big way. It was not long before investors, and frankly some advisors, began to mistake a bull market for “brains.”

This all changed with the market debacle of 2000 to 2002.  A 53% decline ensued from peak to valley. Once again, the value of solid and unbiased advice was evident. Many wire house brokerage firms faced fraud charges for willfully and deliberately writing false research reports on companies such as Enron, World Com, Global Crossings, Lifeminders and others in order to line their pockets. Large investment banking fees were identified as the major reason these firms compromised their own research and put their retail clients last. Another exodus occurred with advisors and their clients going to the independent firm channel.

Another market decline from October 2007 through February 2009, resulted in a market drop of 57% in seventeen months. Many experts feel these very same large wire house firms along with many large banks were to blame. They leveraged themselves to levels that would lead many to bankruptcy or forced merger at the expense of taxpayers.

Independent advisor firms have provided a solution rather than being part of the problem. The result was and continues to be movement of both advisors and clients to the independent channel.

Finally, an important message I hope you will take away with you:  Our firm is still standing.  In 1995 when we opened our doors we were guided by our mission statement: “…provide our clients excellent service with integrity.” These are simple words, but how many of the big firms would still be around if they had followed this example?

Yes, it is good to be independent! 

Sincerely,

Jim Wells