Dynasty President and CEO Shirl Penney
Another day, another team of wealth advisors leaving a Wall Street bank.
Four UBS Group AG private bankers overseeing $530 million in client assets are the latest to strike out on their own, creating a Portland, Maine-based firm called Great Diamond Partners, according to a statement Monday. Last week, five Bank of America Corp. advisors in Atlanta overseeing $450 million in client assets departed, while a $6 billion Texas team split from Morgan Stanley in April.
Breakaways are occurring more frequently as advisors hoping to exert greater control and keep a larger share of the revenue bolt big banks to create boutique firms. Smoothing the way are technology ventures such as Dynasty Financial Partners, created by former Citigroup Inc. executives, which provide record-keeping, trading platforms and product offerings once available only at the largest firms.
"Large complex teams require large complex solutions," said Tim Oden, senior managing director of advisor services at Charles Schwab Corp. "Before the ecosystem existed they had no choice, but now they have a choice."
Siphoning Talent
Other wealth-advisory firms including Rockefeller Capital Management have also been siphoning talent. The company, run by former Morgan Stanley executive Greg Fleming, has lured teams from Bank of America and UBS in recent months as part of an expansion strategy.
A 10-year bull market and an increase in the number of wealthy families across the U.S. have helped fuel the movement. Most of the recent breakaway teams have yet to be tested by a slowing economy or serious market correction, but Great Diamond founding partner Steven Tenney said some of the risks have been mitigated by improvements in technology.
"The technological advances are independent of the economy and market cycles," said Tenney, who spent 26 years at UBS. "The best way to capitalize on that technology is by being an independent firm."
UBS spokesman Peter Stack declined to comment.
'Well-Traveled' Road
Great Diamond, as well as the advisors departing Bank of America and Morgan Stanley over the past few weeks, partnered with Dynasty to set up independent companies. Breakaway teams managing a total of about $25 billion now use Dynasty's platform, the New York-based firm said.
"Somebody who has a business of that size isn't going to take a significant risk and hope it works out," Dynasty Chief Executive Officer Shirl Penney said in an interview. "A lot of those teams wanted the road to independence to be a little more well-traveled."
For a company the size of Bank of America, which has seen three teams overseeing a total of about $3.9 billion depart for Dynasty in the past 10 months, the losses are relatively small. The Charlotte, North Carolina-based bank's wealth-management businesses have $2.8 trillion in client assets.
