David Carroll, Wells Fargo's executive vice president for wealth, retirement and brokerage, made an interesting projection about the brokerage business at a recent Reuters summit. He predicted that within five years many top U.S. brokerages will resemble European private banks. That is they will be able to offer a full-menu of financial services, from lending and consumer banking to brokerage and estate management and everything in between.

The big consumer banks with active brokerage units will have a huge advantage in the unfolding industry, he noted. Carroll also said the shape of the industry would resemble a bar bell, with large diversified financial companies at one end and niche players at the other. Wells Fargo (NYSE: WFC) thus would consider buying a brokerage but there are no large acquisition targets left in the United States.

Will this prediction prove prescient? Well, given the state of Swiss private banking and some of its disclosure problems, we can hope not in some respects. But in other regards this is a semantic issue. All wealth management operations are aiming to be private bankers these days in that they want to scale to meet all financial needs. You can call the high end of this private banking. Morgan Stanley senses opportunity.

The real issue here is whether consumer banks can stitch together services that really sets them apart. That is, does Bank of America Merrill Lynch have an advantage over Morgan Stanley Smith Barney? 

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