Exits from JPM and Morgan Stanley in pursuit of independence
Mindy Diamond Quoted
By Jason Bisnoff
Exits this week from JPMorgan and Morgan Stanley continue to show the move of advisers from major names to more independent avenues.
Andrew Graham, a former JPMorgan global multi-cap growth strategy manager, has left to launch his own registered investment advisory business under the moniker Jackson Square Capital, backed by Portland, Oregon-based back end platform and consultancy tru Independence.
Also this week, Diamond & Bottefield Private Wealth Management left Morgan Stanley for independent partnership Steward Partners Global Advisory, where Brett Diamond and Jason Bottenfield will help start up a new Dallas office, bringing over $285m in assets.
The movements are part of a bigger trend of advisers and advisory teams leaving larger entities in pursuit of greater independence.
“Those two deals are not one-offs, they are very much indicative of a very solid, constant and continuing trend we are seeing that is not new but increasing over time,” Diamond Consultants President and CEO Mindy Diamond said. “What is driving this is a change in advisor sentiment. Their motivation has changed over the last 10 years. What drives them today is a desire for freedom, flexibility and control and while they wanted that 10 years ago, they wouldn’t sacrifice the big signing bonus from the wirehouses.”
Diamond, who founded adviser recruitment firm Diamond Consultants in 1998, said that the smaller entities advisers are joining do also offer big deals, but the flexibility they provide is being valued over the big signing bonus at a wirehouse. “Where advisers are going has changed completely,” she added.
Among the impetus for more independent minded advisers is an easier path to attaining the flexibility they desire. tru Independence is one of several entities providing smaller firms with an easier transition when leaving corporate structures by offering back and middle office support.
“Ten years ago, if an adviser valued freedom and control, the outliers went independent but the majority put it off because of the risk,” Diamond added. “Today advisers are saying freedom, control and ownership are more important than anything and simultaneously the independent space has grown with more options that offer the opportunity to be independent and monetize the business. That is the biggest thing that changed, you can have sexy economics, freedom and control.”
Wealth management platform Focus Financial Partners has offered that type of model to the tune of eight new partner firms and 17 mergers to existing partner firms last year. They are on pace to surpass that pace in 2019 with Connecticut-based MacGuire, Cheswick & Tuttle Investment Counsel, Atlanta-based Anthony Smith Advisors and Patton Albertson Miller Group, as well as Australian ultra-high net worth firm Escala Partners all coming on board this year following Focus going public last July.
RIA network HighTower Advisors brought on a new CEO earlier this year in Bob Oros, who told Fund Intelligence that they will continue to have an M&A focus in 2019, looking to expand from its current $60bn in assets and 92 adviser teams. Dynasty Financial Partners recently moved its headquarters, overseeing 47 RIAs and more than $30bn in assets on the platform, to Florida in a move indicative of continued expansion ahead. Indianapolis-based wealth management platform Sanctuary Partners saw similar expansion of late, prompting the addition of two new areas of focus in family offices and tax services.
With a different model that is more similar to a traditional RIA, Steward Partners has been able to pick off investors from several of the wirehouses, including adding several teams from Wells Fargo that are chasing independence.
“A cottage industry is set up to serve the breakaway system with access to capital turnkey solutions, access to compliance and everything and anything the adviser needs. It’s an ecosystem that has been born,” Diamond added.
As originally appeared in Fund Intelligence