Recruiting Shift: UBS And Rockefeller Significantly Outpace Rivals Using Different Narratives

It is an understatement to say that the Covid-19 pandemic ‘changed’ wealth management habits for both firms and clients. Simply claiming changes doesn’t do it justice. Some serious shifts took place and the initial results as it relates to recruiting are beginning to become very clear.

A reduction in costs and overhead associated with hard asset real estate seems to have been shifted to recruiting budgets and high-quality, tenured advisors and teams are benefitting in ways the industry has never seen before.

Specifically, elite (those listed on Forbes and Barron’s lists) teams are defaulting to what is familiar, if not a smidge smaller in scale. As of this writing, two firms have taken a significant lead in the recruiting economy: UBS and Rockefeller.

The case for UBS looks like this – the global leader in wealth management, resources that rival anyone in the industry AND they’ve decided to remove any and all hurdles from their deal when recruiting from traditional rivals (MS, WF, ML). That narrative has never been heard or seen before and it is having a massive impact. **read that again, no hurdles in their deal.

Rockefeller, on the other hand, has become the ‘Goldilocks’ of the wealth management world. Not an independent or hybrid, killer tech platform, a legacy brand name that seriously resonates with HNW and UHNW clients, and a commitment to bring on big teams that are uniquely respected amongst their peers.

What we’ve seen has become a pattern in 2021. The commitment by UBS to go with a no hurdle deal has been a brilliant decision by their leadership, and the Rockefeller name and culture continue to be an easy ‘yes’ when advisors of distinction are approached.

Ultimately, the numbers tell the story: UBS and Rockefeller are leading the recruiting pack by double their closest competitors. Both firms claim asset transfer numbers in Q1 of better than $8B. First Republic and Morgan Stanley are hovering around $3B. A massive gap.

Given that wealth management recruiting is the ultimate ‘capitalism economy’ and assets and revenue flow to the best and brightest – digging deeper with both firms should be on any curious advisors list.

Broke: Merrill Lynch Recruiting Is A Zombie Cartoon

Merrill Lynch, the firm that used to set the entire narrative for the wealth management industry, isn’t even a skeleton of its former self. It has become a zombie. The walking dead. An easy-to-kill, slow-footed organization that doesn’t have a meaningful reason to continue to exist. Zombie.
Overly harsh one might ask?? No, it isn’t. In fact, Merrill Lynch isn’t even called Merrill Lynch anymore. Bank of America thought it was a great idea to rebrand as just ‘Merrill’ – you know, the name of Mel Gibson’s brother in the movie Signs. Yep, that guy can now accurately be equated with the Merrill brand. Washed up.
In just the 8 weeks since the turn of the calendar, the continued acceleration of Merrill teams has migrated to Morgan Stanley, UBS, and Rockefeller. Does anyone want to guess how many recruits Merrill (a division of Bank of America) has signed up in that time? How many have been announced? Nada. Zilch. Zero. 
Merrill Lynch teams are increasingly easy to poach as the pervading attitude is “there really is no reason for me to stick around anymore.” Management turnover, culture destruction, colleagues have bounced – if you are a big team or advisor still at the firm you either hate change as much as I hate asparagus, or you simply aren’t marketable. It’s one or the other.
In a scene from The Walking Dead, rival firms have a massive cache of weapons, and Merrill advisors keep slowly walking in the same direction. Easy targets. “Swing away Merrill, swing away…”

UBS is able to offer

UBS keeps stacking up JPM Private Bank teams across the country. Another one just dropped as we were passed a note moments ago. This makes the third sizable move from JPM to UBS in the past six months.

Ryan Bristol and Patrick Schaffer are migrating to UBS in Los Angeles as this article is being penned. The team manages $2.5B in ultra-high net worth assets for clients and generate better than $26M in annual revenue. These moves follow large teams and assets of scale from JPM to UBS in Miami and Atlanta. And our intel tells us that the path from JPM to UBS is set to be followed by others.

Some background gives some context to the ‘why’ behind this move and others. JP Morgan Private Bank advisors manage huge books of assets and generate equally massive amounts of annual revenue – yet they get paid peanuts by way of an annual salary and a ‘subjective’ bonus at the end of each year. No comp grid whatsoever. JPM Private Bankers are, by any measure, wildly under-compensated.

UBS is able to offer teams like this a grid that pays them 50% of every dollar in revenue generated, plus a recruiting deal, and a retirement deal that is the envy of the industry. The numbers are remarkable and have opened the eyes of teams like Bristol and Schaffer. What follows seems to be speedy due diligence and asking questions like ‘why not’ instead of ‘why’ leave JPM.

The Grand Canyon-sized gap in overall cash compensation is hard to believe at first – JPM Private Bankers aren’t used to being treated like the belle of the ball. Once they verify the numbers, the philosophical debate is relatively short.

Digging a bit deeper into the work UBS has been doing in the ‘private banking’ space a clear pattern has developed. They are being aggressive with JPM, Goldman Sachs, and Alliance Bernstein. Take a look at the moves over the past six months:

– JPM Atlanta – Jeff Lewis and Steve May $20M
– JPM Miami – Brian Beranha and Vincente Del Rio $8M
– Goldman Sachs DC – John Hanley $9M
– Goldman Sachs Philadelphia – Scott Belveal and Adam Lambert $7.5M
– Goldman Sachs Boston – Denis Cleary and Greg Devine $20M
– Alliance Bernstein All Locations – moves that equal $40M

Again, the above moves have formed a clear pattern. For the likes of Ryan and Patrick, the difference in culture and ecosystem was reason enough to make the move. Will others follow? Count on it.

recruiting deals

Three weeks ago we received word that Wells Fargo WMA was set to make drastic changes to its International Wealth business line. And by drastic changes, we actually mean shut it down.

And that’s exactly the action they took.

Now, it wasn’t as abrupt as other firms that have executed the move in the past several years, but advisors that manage a portion of their book outside the US were sent scrambling.

As we hear it, Wells Fargo advisors are being asked to request clients to either go elsewhere or being encouraged to take their book altogether somewhere else. The kind of abrupt and career shaking move that Wells hadn’t signaled in any way until announcing it internally a couple of weeks ago.

A few points we find interesting in regards to the new policy:
1. If an advisor or team has more than 40% of their book in international business they are being asked to leave the firm.
2. Remaining balances on previous recruiting deals are being waived to facilitate exits from Wells Fargo.
3. Wells Fargo is even allowing exiting advisors to take their deferred comp balances with them.
4. UBS and Morgan Stanley are offering deals that stretch beyond 500% of current annual production and are being aggressive in their pursuit of the right teams.

So what now? Wells Fargo teams have been doing their due diligence at UBS and Morgan Stanley – two firms where you can still meaningfully manage international accounts. Some smaller banks and boutique firms are also in the mix but don’t generally offer recruiting deals. UBS is being understandably aggressive given its global wealth management brand.

We doubt that any litigation will find its way into this move by Wells Fargo. By facilitating moves via deal forgiveness and deferred comp awards, Wells Fargo should avoid the kind of mistakes that landed Credit Suisse in hot water when they shuttered their WMA operations. As with other moves in wealth management over the past six to seven years, time will ultimately tell.

Meanwhile, in the recruiting world, it’s ‘game on’ for Wells Fargo International teams.

Goldman Sachs Updates Wealth Advisor Retirement Structure; Remains Woefully Short Of Rivals

Let’s get right to the point here… Goldman Sachs wildly under compensates its wealth advisors in ways that we still can’t understand. Even faced with defections and ‘in your face’ data that proves the firm is significantly behind versus the likes of Morgan Stanley and UBS, management still doesn’t believe it matters.

Case in point, the production-based changes Goldman Sachs recently announced to retirement packages for wealth advisors. Goldman announced a 3x payout to annualized W2 comp. in other words, if an advisor makes $1.5M in 2021 and chooses to retire, he’d received $4.5M in tiered payments over a few years.

Rival warehouses have programs that range from 180% – 260% of annualized production, not W2 income.

Using round numbers as an example. If an advisor produces $5M annually his retirement package payout would equal $13M bucks. More than 300% more than Goldman’s recently updated retirement package. Goldman Sachs wildly under compensates its wealth advisors. The raw numbers tell the story.

Sneaky Good – First Republic Continues To Win Head To Head Battles For Wirehouse Talent

First Republic is no longer a secret among elite advisors. The banks’ wealth management arm has stacked up big wins from every corner of the wealth management map.

As of late, they’ve been particularly successful with two firms, Merrill and Lynch. In our conversations with advisors engaged with First Republic the word ‘culture’ comes up a lot.

Of course, culture matters, but so does the sizable deal First Republic offers elite advisors. Over a seven-year period, the FRB offer can go as high as 500%. Wow. And 200% of it can be had as you walk in the door moments after resigning from your old firm.

Back to culture for a moment – Merrill advisors continue to seek out the types of firms that feel like Merrill use to feel; exclusive, collegial, and entrepreneurial. FRB fits that bill well, so winning recruiting battles should continue.

Expect more advisors from the firms, Merrill and Lynch, to find their way to FRB. :)

Massive Merrill Team Jumps To First Republic; Phil Scott Group In Washington State Take $2.7B In AUM To New Firm

A massive move occurred in the Pacific Northwest last week. The Phil Scott Group out of Merrill Lynch made the move to First Republic. The numerics surrounding the transaction are eye-popping all around and sent shockwaves through BofA/Merrill in that part of the country.

First, Mr. Scott was a 36 year veteran of Merrill Lynch an absolute ‘thundering herd’ lifer. He joined the firm out of the Naval Academy in 1984 and seemingly never considered leaving. That all changed last week. Chatter in Seattle and the surrounding wealth management organizations was abuzz given the largess of Mr. Scott and his team.

The numbers are just are even bigger than the surprise move: $18M in annual revenue and $2.7B in client assets under management. A huge win for First Republic in the region. Doing a little napkin math – the total deal for the team given the revenue stated above will climb beyond the $60M dollar mark. Wow.

Mr. Scott is a Barron’s ‘Hall of Fame’ advisor and his Barron’s team bio reads as such:

“Phil joined Merrill Lynch in 1984 after graduating from the U.S. Naval Academy with degrees in International Relations and General Engineering. His extended tenure with Merrill Lynch is paralleled by that of his team members, many of whom have collaborated with Mr. Scott for more than 15 years. That continuity and consistency, Phil believes, allows the team to deliver an exceptional client experience.”

Pulling back to 50,000 feet – the narrative continues for Merrill Lynch, as they lose yet another huge producer and capstone in a money center city. As has been occurring for a number of years now, the largest producers are leaving the firm at a clip never before seen at Merrill. Choosing a name like First Republic is of real interest; but maybe more so is the reality that a 36 year veteran of Merrill finally decided the firm was no longer his home.


SEI Expands Virtual Advisor Educational Programs

John Anderson, director of practice management solutions at SEI, is all-in when it comes to
digital solutions. “Advisors no longer have to get in the car, drive to the office, find a place to
park, and sit in the office for hours,” he stated in a press release earlier this week.

SEI is trying to lead by example when it comes to digital engagement. They’ve implemented a
shorter meeting format for training and offer it exclusively online. They’ve even gone so far as
to replace the inhouse meal they previously offered with free UberEats delivery.

Surprisingly, many advisors turn down the free meal. UberEats offers that are not redeemed
are donated. SEI has given over $200,000 this year to local food banks.

“This is happening at a client level also,” Anderson claims. “Zoom and WebEx meetings are
shorter and more meaningful. Advisors now have the ability to set meetings where they’re not
just dumping data. They can be more engaging to their clients that way.”

It doesn’t stop there. The new mindset extends to recruiting. Prior to the pandemic, SEI did a
two-day in-house training seminar for new recruits. That’s been changed to a “Discovery Day”
that lasts sixty to ninety minutes in an online format.

For current advisors, SEI runs “Webinar Wednesdays,” offering practice management training
and planning tips for both brick and mortar and virtual advisors.

Schwab Offers Full Time Positions to Virtual Summer Interns

Like most financial firms, Schwab moved their summer internship program into virtual mode
this year. Elizabeth King, the SVP for enterprise learning and talent management, reports that 240 interns in over 130 cities went through the program this summer.

“Everyone’s been working in their kitchens and bedrooms,” King said in an interview with
Business Insider this week. “Many of these interns are aspiring seniors in college who will be
offered full-time jobs at Schwab in the upcoming weeks.”

According to Schwab policy, those offers should number over one hundred, roughly half of the
current class of their Intern Academy Program. The positions will be in finance, investor
services, corporate risk management, and technology.

Goldman Sachs Goes Virtual but shortens Internship Program

Goldman Sachs delayed their virtual internship program this summer, choosing to shorten the
program and start July 6th instead of back in June. It typically takes ten weeks of training, hands-on working, and networking with management to cultivate a top-quality analyst prospect.

With the abbreviated time frame and lack of personal contact, the Wall Street investment bank
is experiencing uncertainty over what the internship program will produce this year.

Citi also ran a shortened five-week virtual internship program this summer. Unlike Goldman,
they are being pro-active about hiring. Earlier this week, the bank guaranteed full-time offers to
interns in New York, London, Hong Kong, Singapore, and Tokyo.

Competing banks and private equity firms started much earlier and are also making hiring
decisions. Morgan Stanley was one of the first to offer a virtual summer internship this year.

“Once we realized what the timeline was for Covid-19, it was an easy decision,” stated Jeff
Brodsky, chief human resources officer at Morgan Stanley. “It’s all about execution now. We’re
preparing to make our full-time job offers in the next few weeks.”


Regional Firms Continue Recruiting Hot Streaks: 5 Reasons Why The Trend Will Continue

Regional firms have been absolutely crushing it over the past 24 months.

Most prognosticators thought that the fiduciary rule and protocol exit disruptions would disproportionately positively affect independents and RIA aggregators. While those businesses have benefited, the boom has taken place in the halls of Stifel, Raymond James, RBC, Janney, and others.

To drill down a bit, three players have gathered assets like they’ve never done before: RBC, Stifel, and Raymond James.

Here are five reasons why it’s happening.

  1. Culture, culture, culture. Merrill Lynch was an advisor’s dream twenty years ago. Brand cache, a belief in the advisor as to the firm’s revenue center, stock stability and golden handcuffs, the ‘Thundering Herd’, and smart national marketing campaigns. Now, it’s an afterthought at Bank of America. Regional names now ‘feel’ like Merrill felt in the 90’s – entrepreneurial and collegial. Their opinions and client-focused businesses matter again. Culture.
  2. Recruiting deals at regionals are either equal to or larger than wirehouse deals. Just five years ago that simply wasn’t the case. Management at places like RBC saw an opening when UBS and Morgan Stanley decided to de-emphasize recruiting two years ago and reduce their recruiting deal numbers and stepped into the gap.
  3. Executive leadership. As wirehouses have seen significant churn amongst their leadership ranks, regionals have been ‘steady as she goes’. Furthermore, regional leadership has made smart moves and kept their powder dry with respect to the DOL fiduciary rules. They waited, wirehouses panicked.
  4. Demographics. As large scale, legacy teams are at the height of their earning power (and in the midst of a historic bull market), they are looking for a soft landing that won’t nip at their heels with new quotas connected to households, loans and checking accounts. Quotas that if not met take a chunk out of their grid payouts.
  5. Financial crisis residue remains. Wells Fargo is still fighting the stigma of a scandal that is two years old. Merrill is no longer Merrill. Nearly everyone took a big bailout. But regionals don’t even have a whiff of what remains of that stink. No bailouts, no ‘too big to fail’ documentary cameos. It is an easy sell to clients who previously may have questioned a move to a regional name. That question is gone, replaced by ‘could it happen again’ to legacy wirehouse firms.

Add it all up and you have legions of million-dollar producers taking VIP trips to RBC, Stifel, and Raymond James on the regular. And the pace doesn’t look like it’s about to slow. Every single quarter wirehouse headcount dwindles. No new narrative or bloated recruiting deal can compete with the reality of the above.

Regionals will continue to win.

Stifel Recruiting Rebounds

After the departure of their national recruiting head, John Pierce, Stifel recruiting took a bit of a pause. As they circled the wagons they remained engaged with advisors that had been in the pipeline before Mr. Pierce’s departure and the fruits of those efforts have finally found their way to the firm. Via On Wall Street

“The largest of Stifel’s latest recruits is an ex-Merrill Lynch team that managed $935 million. It is composed of advisors Blase Sparma, Stephen Long Jr., Brad Ripplemeyer, and Hampton Ballard. They made the move last week and will staff a new Stifel office in Venice, Florida.”

“Sparma and Long had been at Merrill Lynch since starting their careers in 2000 and 2004, respectively, according to FINRA BrokerCheck records. Ripplemeyer began his advisory career at Smith Barney in 2000, moving to Merrill in 2012. Ballard has spent the entirety of his four-year career at Merrill.”

All in all, Stifel brought in $1.5B in client assets via their recruiting haul, adding several other advisors and teams to go along with the flagship group from Merrill Lynch.

Over the past four years, Stifel has feasted on Merrill Lynch’s legacy teams and advisors. This group adds to that batch of former Merrill Lynch faculty that now call Stifel home.

Beyond Merrill Lynch, Stifel also landed a sizable grouping of Wells Fargo talent across the country. Interestingly enough Wells Fargo has a sizable presence in St. Louis alongside Stifel – so a bit of hand to hand combat on the recruiting front.

Whether or not Stifel can keep up the pace that is set in 2018 and 2019 is yet to be seen, but $1.5B in recruited assets is a great start.