Massive UBS Team Migrates To RBC; Los Angeles UBS Complex Shrinks Further

As the recruiting year heads to its close the patterns and rhythms in wealth management seemed to have accelerated. Not only are more teams making transitions, but larger teams are doing the same – with the consistent theme being an exodus from wirehouses to regionals or other platforms altogether.
Case in point, a massive UBS team moving to RBC:
“Roger W. Stephens and Dan Rothenberg, who had been with UBS for seven years following a stint at Morgan Stanley, generated fees and commissions of about $12.5 million in the last 12 months on about $7.5 billion of customer assets, said two people familiar with their book. RBC confirmed the asset estimate in a press release about the new team, which it said will open the firm’s first branch in downtown Los Angeles.”

“Stephens and Rothenberg’s clients include corporate retirement plan sponsors, nonprofit organizations and wealthy individuals, according to Stephens’ UBS web biography. The sources said that despite their large book, the advisors chose not to affiliate with UBS’s private wealth management division for very wealthy clients.”

“We are excited to come to a firm that has a smaller, more focused group of people, where we feel we can really make a difference,” Rothenberg, who like his partner was a managing director at UBS, said in a prepared statement.”

Both the assets and production are ‘of scale’ as they say. And it follows another team in downtown LA that left UBS two months ago producing $11 million a year. UBS management in LA may have some explaining to do!

UBS and Morgan Stanley: The Numbers Don’t Lie; Recruiting Losses Outpacing Record Outflows Set In 2018

Exiting the broker protocol was hailed as a bold, but necessary move by both Morgan Stanley and UBS last year. New programs were put in place to retain star advisors and stem the tide of departures to rival firms up and down the competitive wealth management marketplace. The recruiting numbers don’t lie, it isn’t working.

Based on the stated asset transfer numbers listed at AdvisorHub, both UBS and Morgan Stanley are on pace to outflank the record setting broker departures set in 2018. Big teams, big assets, reputation value – all headed elsewhere. It looks and feels like the firms decisions to exit the broker protocol and pursue litigation against any advisor choosing to ply his craft at any other firm has been a bust.

Morgan Stanley saw around $6.5B in client assets exit the firm last year. So far, through June of 2019, that number is nearly $11B and should easily double last years take by year end.

UBS watched $13B beat a path to other firms throughout 2018. As of June of 2019, that number is near $7B and has accelerated over the past two months.

Merrill Lynch continues to have its own problems without exiting the protocol, and Wells Fargo got hammered last year with ‘exit inducing’ headlines. But Wells Fargo has eschewed any talk of exiting the broker protocol and stemmed the tide, on a percentage basis (though it looks as if they could still lose north of $20B in client assets this year), versus a crowd leading number in 2018.

Morgan Stanley and UBS just decided to double down on a trend of advisors moving away from big box shops by becoming adversarial with their biggest and best producers. Given how entrepreneurial and ‘maverick’ advisors tend to be, not the greatest choice of strategies by either firm.

Will the wave of moves slow down or give way to legal hurdles set up by the broker protocol exit? It doesn’t look that way through the first half of 2019. We’ve stated before that we think a ‘broker protocol 2.0’ could find its way onto the wealth management landscape. If enough client assets bolt, another shift will have to occur.