UBS Stalking Large Goldman Sachs Teams; Pushing Their Recruiting Deal Higher For GS Elite

Goldman Sachs wealth managers have traditionally been very difficult to pry away from the firm that they’ve spent nearly their entire career with. Beyond brand loyalty their have been a few well known reasons for the ‘stickiness’ of GS folks and their clients. Employee contracts, non-solicit and non-compete policies, and even garden leaves are trail of tears that follow Goldman Sachs advisors when they leave.

Still, the books they bring with them are some of the biggest on the street and are highly sought after. UBS has decided that the ask is worth the price and has decided to focus on recruiting Goldman Sachs teams in money-center cities across the US. And the deal they are offering is uniquely aggressive.

In speaking with a recruiting contact that is familiar with both firms, the deal was laid out for us… and under some circumstances could stretch beyond 500%. Yes, you read that right.

Per our contact:

”Here is the deal for guys at GS. It is between 250-275% (not including deferred) of production with a combo of upfront and back ends. Importantly, this is a guaranteed deal and they also offer members of the team to retire so the total deal computes out to 550%. Huge commitment by UBS.”

Huge commitment indeed. The numbers speak for themselves. Say you are a team founder and 50 years old, with an ya production of $6M. Doing a little ‘back of the napkin’ math and that’s better than $33M dollars over the final decade plus of your career. Not bad work if you can get it.

So yes, UBS has made a commitment to find and reel in Goldman Sachs teams; and clearly are happy to pay whatever price is needed to book em’.

Post Coronavirus: Could Protocol 2.0 Become A Reality (we keep hearing it)

Whispers are beginning to make their way to our big ears. The exit out of the broker protocol by the likes of UBS, Morgan Stanley and other large firms has been a disaster on several fronts.

Legal fees have skyrocketed, advisor exits haven’t meaningfully slowed, the reputations of the ‘prexit’ firms have taken a further beating, and recruiting deal are either at or beyond all-time highs (see: Wells Fargo).

The broker protocol exit was supposed to be the catalyst to greatly reduce advisor movement between Wall Street firms and adjust the recruiting loan/bonuses stuck on corporate balance sheets.

While some balance sheets have leveled off (UBS) others are growing. Advisors continue to exit and have found creative ways to communicate with clients and avoid the legal entanglements connected to non-solicit and non-compete language. Mobile apps like WeChat, Telegram, WhatsApp etc allow for ongoing conversations that are simply not searchable and provide legal cover.

Which leads us to conversations we’ve heard are making their way through US wealth management board rooms. Was exiting the broker protocol a mistake? And if they were to implement a ‘Broker Protocol 2.0’, what would it look like? 

It is likely that those talks have begun. The current environment isn’t working.

Using UBS as an example, instead of exiting the protocol altogether they could have (should have) just slowed recruiting to a crawl and went significantly upmarket. Which is essentially what they’ve done anyway.

It will be interesting what to make of Protocol 2.0. We expect it to take a while to take shape, but there is no doubt it is being discussed.


Indie Firms Fall Way Behind In Recruiting; And It’s Not Just About ‘Deal Size’, Blame Private Equity

It would be easy to explain away the slow finish and slow start (2019/2020) in recruiting for independents and RIA’s by citing the explosion in deal size at the wires and firms like First Republic and Rockefeller. But that is only part of the story, and frankly those dynamics generally existed most of last year when large teams trended towards the independent channel and away from ‘full service’ platforms.

So what is really going on here? What is the backdrop giving larger teams pause as they execute their due diligence and plan a move that will set the tone for the next two decades of their career. Why has the ‘hit the bid’ movement towards RIA’s and independent firms slowed waaaay down?

Two words: Private Equity.

In conversations with several notable experts in the RIA space, the private equity creep, and lack of transparency about why, what, and who owns significant pieces of big box RIA’s – it’s clear a conversation needs to be had about the ‘teeth’ private equity has sunk into the RIA movement.

Here is a piece of a conversation we had yesterday about the potential problems that private equity poses in the RIA space:

“It’s unclear how Rockefeller, Steward, Snowden, HighTower and others are going to shake out with professional private equity involved and the cloak and dagger term sheets they will never show recruits or anyone else- that’s what threw HighTower sideways a couple years back – the Preferred A convertible terms of second round of PE that had claws-even the management team was unaware of – it’s a major problem for any Independent firms offering equity – that have professional investors watching the clock and collecting a big coupon. Whereas First Republic and others are throwing around huge amounts of cash- add the big four are all back in the game – and Wells Fargo’s open pocketbook, indies will have a tougher year. Did I mention that the top recruiting firms are getting paid huge retainers and some are being paid 10%. Recently was told RJ has a new deal for recruiters paying them up to 10%.”

“Game is on like never before- LPL- 100%+ cash totally forgivable and now you have the big 3- Fidelity , Schwab and Pershing – actually uttering the words Transition Assistance- code name for forgivable recruiting deals- where just last year it was ‘Working Capital’. It’s extended as a repayable loan, at a fraction of the size. Indies will be and are being hit the hardest and will be forced into ‘rollup’ mode to survive- print that- put it in an envelope and open in 12-18 months – it will be news by then- not a observation or prediction.”

The details there are striking, but most important is the claim of a lack of transparency with recruits. And there’s the rub; recruits don’t want to sign on to a black box having know idea what there equity could be worth or diluted to in a couple years.

Another conversation went even deeper about the role of private equity in the independent space:

”So what’s happening with the term sheets is PE firms put in good lever and bad lever covenants. They miss goals set (higher the goals the higher the valuation, lower equity % at first to PE firm). But by agreeing to “reach goals” to give out less equity, they inevitably miss those lofty goals and pay dearly, bad levers are triggered, more equity, greater PE equity ownership, more control, possible reset higher on convertible note, comp/bonus cuts, additional board seats etc. It’s like the +400% recruiting deals, most firms know on average, with backend hurdles, etc, that they will only pay out 225% over a period of years. That’s how they set it up, knowing most will never see the full amount, Wall Street trick that has been used for decades, perfected by the wires. That same concept is now being used in the indie space, except on the corporate level.”

Read these quotes and do your homework folks. There are no free rides in finance and wealth management. If you take the big check and move to Morgan Stanley, you are making a deal with all manner of compromises. If you make a deal with a big box RIA (Steward Partners, Snowden, Focus, Dynasty, HighTower via merger or acquisition) you are also making some sort of compromise.

The choice is yours, but understand that the ‘purity’ of the indie trade isn’t what it used to be.

Continued Recruiting Aggression: Wells Fargo Deals Tick Higher Amidst Pandemic ‘Opportunity’

Whether you are an independent advisor, wirehouse advisor, bank broker, or any variation thereof; Wells Fargo wants to offer you a historic deal in the hopes that you will jump at the chance to take it. We’ve been privy to several Wells Fargo offers in the past two weeks and they are aggressive to say the least. Using the perceived opportunity to quickly transfer client assets in the midst of the realities of ‘shelter at home’ policies across the US – Wells Fargo has been more aggressive than anyone in recruiting advisors and deal making within wealth management of late.

We’ve routinely seen deals that press beyond the 335% – 350% number for wirehouse advisors of all sizes. Not just the top tier teams that Wells is chasing, but every wirehouse advisor that they sit in front of at the moment. Bank brokers are negotiating deals that are anywhere between 220% – 250% right now. Numbers that were absolutely unheard of in that channel just 18 months ago. The same aggressiveness is being deployed in their well known independent channel as well.

What is the thought process behind the push to ‘make it rain’ in the recruiting world right now? We spoke to two people in recruiting at Wells Fargo and came away with some answers.

“The timing is critical, and the news cycle is currently our friend, as opposed to an obvious nemesis. Instead of all eyes being focused on potential sins of the past, we can have conversations that are about the here and now, strength of the firms overall balance sheet, and the go forward plans of a shiny new management team.” – said a recruiter at the firm on condition of anonymity.

“Yes there is an obvious push – and it is directly correlated to what we see as an opening in advisors evaluation of this current crisis, the turmoil in the markets… every serious bear market has seen significant advisor movement over the past 30 years, so we’d rather be on the ready rather than chasing the rest of the field. Coming out of this, and whatever that looks like, our management team wants to be aggressive and proactive as is allowed within the industry. Deals are not going to be pulled back in anyway, with the caveat that if things get worse and a deeper recession than what is currently projected arrives, we will keep pressing forward. Opportunity doesn’t always announce itself, it has to be grabbed. We think that is what we are doing right now.” – a complex manager at Wells Fargo on the condition of anonymity.

Getting into the proverbial hive mind of Wells Fargo has been interesting over the past few days. How a bank of scale and one of the worlds largest wealth management organizations is using what looks to most to be a slowdown to pick up their recruiting efforts is compelling. Are they necessarily going against the grain? Maybe, maybe not. But one this is absolutely for sure – they are clearly committed to the path they are on.

UBS Grabs Morgan Stanley Talent Out West; Announces New Market Heads In California And Colorado

UBS continues to bolster its management ranks by grabbing talent from its rivals; most notably from Morgan Stanley. After executing their legal obligation that is ‘garden leave’ the former Morgan Stanley managers could finally be announced.

As per internal communications that were passed to us earlier today:

”I am excited to announce that Mitch Markley will be joining our UBS West Division team as the Rockies Market Head following his garden leave with Morgan Stanley.”

“Mitch Markley has been in the Wealth Management industry for 15 years serving roles in both Leadership and as an Advisor. In 2011 after 7 years as a Financial Advisor with Morgan Stanley in Denver Mitch transitioned to be the Business Development Manager for Colorado, Utah and New Mexico. In 2015, he was promoted to Branch Manager in La Jolla, California. During his tenure in California Mitch built out the Private Wealth Management and Graystone Consulting businesses in the San Diego market. In 2018 Mitch’s responsibilities expanded to include all North San Diego county for Morgan Stanley.”

“Mitch is a proud native of Colorado. He was born in Greeley, attended High School in Arvada and received his degree from the University of Colorado at Boulder.”

And the second hire was celebrated in much the same way:

”I am excited to announce that Justin Frame will be joining our UBS West Division leadership team as the Los Angeles-Orange County Market Head following his garden leave with Morgan Stanley.”

“Justin Frame is a seasoned veteran in the Wealth Management Business with 25 years at Morgan Stanley.  He began his career as a financial advisor, and as a CFP he developed his practice through comprehensive high net worth planning. After 12 years of club level success as an advisor he transitioned into leadership in branch manager roles throughout Colorado. In 2009, Justin took on a regional role as COO across 7 mountain states. A promotion to Complex Manager brought him to California in 2011 where he ran West Los Angeles.  For the last several years Justin has led in Orange County, most recently the largest Morgan Stanley Branch on the West Coast out of Irvine. Justin knows that people are the life blood of our business and was recognized by On Wall Street as a top 75 manager nationwide in 2017 and 2018.”

“Justin graduated from the University of Arizona.  Justin is active in the community serving on several boards, and is currently board chair for Working Wardrobes in Orange County. Justin embodies humble leadership and is excited to build relationships at UBS and spring boarding his experience to lead growth.”

UBS has renewed its recruiting push and remains aggressive with elite teams, specific to its chief wirehouse rivals. In a short conversation with a manager on the west coast the vibe was “…steady as she goes… no changes have been announced based on either market volatility or the coronavirus stuff.”

Hiring managers from rivals is usually intended to, in the short term, grease the skids to land big teams from the offices they’ve vacated. Let’s see if that proves effective for UBS in California and Colorado.

Former UBS Stalwart In LA Shifts To Wells Fargo; Michael Goldfader Takes Private Wealth Post

Wells Fargo continues to step on the gas with respect to recruiting across the US. Reaching into the management ranks to bolster long term recruiting, the bank continues to burn the candle at both ends to ensure, at some point their client assets under management and advisor headcount ticks higher, rather than several quarters of negative results.

To that end the firm has hired Michael Goldfader (Goldie as he’s known to his colleagues in the business) to head up several offices in the greater LA area committed to UHNW clients i.e. private wealth.

Per media reports:

“Goldfader, who left UBS in December after more than 20 years, joined Wells’ “private wealth” unit on Thursday. It was created about a year ago to service high-net-worth clients of bank branch-housed advisors, and includes brokers who transferred from Wells Advisor’s traditional private client group.”

“Goldfader is a 28-year industry veteran who was among many managers displaced by a series of UBS wealth management reorganizations last year and early this year. He had managed eight offices for the wirehouse, including a Beverly Hills branch.”

Goldfader (and others) was a casualty in the UBS management purge late last year.

“Complex managers Michael L. Goldfader in West Los Angeles, Peter B. Kaldis in Northern Ohio, and Robert L. Karem, who oversaw four private wealth management offices from Atlanta, are being shifted, they said. They have worked in the brokerage industry for 28, 34, and 41 years respectively, with each spending at least half of their careers at UBS and predecessor PaineWebber.”

There is a glut of management talent on the market right now and it is a buyers market. The smartest hires in the largest money center cities will have the biggest impact long term. Mr. Goldfader falls directly into that category. We eagerly anticipate the type of recruiting results we expect to hear from his crew in the coming months; because that’s precisely why Wells Fargo hires him.

NUMBERS CRUNCH: Wells Fargo Wealth Unit Profits Still Sliding, Defecting Advisors Now Number 1500

Wells Fargo continues to be as committed as any firm on the street to recruiting financial advisors into its ecosystem. The numbers associated with their traditional brokerage offer makes that very clear. Crystal clear. If you are a tenured advisor and want to take down the ‘biggest deal on the street’ hit the bid at Wells Fargo.

And yet, the firm continues to sputter in the wake of the three years mature opening of fraudulent customer accounts scandal. The reality of those headlines have been a deep hole to dig out of; and the firms latest earnings announcement proves that even further. The wealth unit (and this is pre-COVID 19) saw profits drop another 20% and the total of defecting advisors now stands at 1500.

Per media reports:

“Wealth and Investment Management, the smallest of Wells’ three business sectors, earned $463 million in the quarter compared to $577 million in the year-ago quarter. The division, dominated by the bank’s Wells Fargo Advisors brokerage unit, was, uncharacteristically, the most profitable of the bank company’s three businesses. It comprised 71% of its parent company’s $653 million profit in the first quarter compared to just under 10% a year ago.”

“While the effects of the coronavirus crisis will surely dominate all earnings reports—Wells is the first bank with a major brokerage division to report—Wells Fargo Advisors made progress in stemming departures from its advisor force and in attracting newcomers. It ended the quarter with 13,450 advisors in its employee and independent brokerage channels, down a relatively modest 62 from three months earlier and off 3% from 12 months earlier.”

While the negative momentum has continued to slow, the reality is still in the numbers. And the next couple of quarters may be even worse, as the effects of the coronavirus show up on balance sheets.

Wells Fargo would be well advised to keep pushing through and recruiting their asses off. New client assets, rather than a rising stock market, is the only way through this mess.

RBC Snaps Up Wells Fargo Advisor; Adds $350M In Client Assets Amidst Coronavirus Turmoil

While wealth management recruiting may have predictably slowed of late, the gears have not completely grinded to a halt. Amidst a market downturn and changes to office and social distancing policies, the need to add assets and production to branches and complexes across the country remains

Select recruits and the firms welcoming them are taking advantage of the current environment and moving client assets at a quicker pace than normal. Clients are largely stuck at home with more time on their hands and fewer distractions, freeing them up to make decisions about transferring their accounts to a new firm and following their advisor wherever he/she has chosen to migrate.

Case in point, a move from Wells Fargo to RBC: Nancy Anstoetter, an advisor of 32 years. Anstoetter managed $350 million in assets at Wells Fargo Advisors, her employer since 1999, according to FINRA BrokerCheck records. Her move to RBC is another in a long line of wins for the firm that remains aggressive in recruiting at the moment.

In a conversation with an RBC executive last week it was obvious to us that the recruiting push will continue and why the message is resonating with advisors:

”What I’ve seen time and time again is a return to an environment where advisors are empowered. Instead of mandates to earn a reasonable payout forced on them, they have an opportunity to transact business in ways that work best for their clients and their business. Then you work your way to things like the firms balance sheet, etc.”

Whatever the cause for the firms continued success in recruiting advisors of distinction they are determined for it to continue. No longer considered a ‘regional’ firm, RBC represents the ‘new national’ breed of firms offering advisors friendly confines.


Morgan Stanley Team Bolts For Ameriprise; Phelps Hamus Group Switches Jerseys In Wisconsin

And just as we suspected the recruiting wheel continues to turn and churn – with an interesting assist from the current events. A Morgan Stanley team left for Ameriprise in Madison, WI last Friday and took with them nearly $1.8M in annual revenue and better than $200M in client assets.

Ron Phelps founded the Phelps Hamus group at Morgan Stanley in 1996 and later added partner Jacob Hamus. Mr. Phelps is a Decorated Veteran of the United States Army and has even authored a children’s book, “The Stealth Dog”. Mr. Hamus started with Morgan Stanley as an intern in 2007 and became a full-time advisor in 2010. Together, with Senior Client Service Associate Wendy Campbell and Registered Client Service Associate Lyam Hunt – the team can claim better than 50 years of service in the world of wealth management.

It is unclear whether or not the Phelps Hamus Group chose the employee or independent channel at Ameriprise. The moment we have those details we will get them to you.

What is true and is of interest – given the timing of this move and the shutdown that exists across the country – they won’t be dealing with a TRO from Morgan Stanley anytime soon. With courts largely closed to anything but clear emergencies at this point the ability for Morgan Stanley attorneys to appear before a judge and be granted a TRO (based on the firms non-protocol status) is essentially zero.

As discussed at the end of one of our articles just yesterday, for advisors leaving non-protocol firms like Morgan Stanely, UBS, or J. P. Morgan the current legal climate works in their favor. Sure, the state of the markets and coronavirus itself are their own separate issues, but short-term this is a green light for some advisors.

Ameriprise Capitalizes Amidst Chaos: Adds 19 Advisors/Teams, And More Than $1.5B In Client Assets

We told you that recruiting wouldn’t slow down during the coronavirus and market correction disruption. If fact, we’ve alluded to the reality that there are real advantages to moving a practice of any scale with competitive former colleagues out of the office, courts closed (avoiding TRO’s from non-protocol firms), and clients who are largely stuck at home and readily available to e-sign transfer documents and have elongated conversations.

So, enter Ameriprise and the news that they’ve on boarded 19 practices in just the past three weeks. A little ‘guesstimated’ math puts the tally at better than $1.5B in client assets – and that number may very well be a bit light. Several names associated with moves to the firm are: Rob Bacino, Marty Mitchell, Simon Wheeldon, Craig and Chad Wilson, Samuel Bartoletta, Scott Kelly and Matthew True, and several others.

Firms that Ameriprise was able to pull advisors away from include: Morgan Stanley, UBS, Raymond James, LPL, Wells Fargo and others. Essentially appealing to the entire swath of both firms and platforms that Ameriprise competes with on a daily basis.

Speaking to a source at the firm they laid out the reasons some of the names above gave for switching to Ameriprise in general and in the midst of the current chaos:

“Most of the reasons that advisors have wanted to leave to join Ameriprise haven’t dramatically changed, rather the impetus intensified a bit (looking for better support, technology, resources). The fact that clients are home and receptive to conversations have made transitions more successful; the rate of asset transfer has been extremely high. Overall, our technology, virtual capabilities, and best in class on boarding process remains a compelling story. We’ve also remained very mindful of advisor and staff safety during these transitions – but are staying aggressive and open for business.”

And the numbers above speak for themselves. Moving that amount of bodies in the midst of a pandemic is a credit to the staff and recruiting leadership at Ameriprise. It is difficult enough to pull off successful transitions in ‘normal’ circumstances – but to be doing it now is remarkable.

Expect more recruiting stories to find their way to these pages and the volume to continue to increase across the industry. The benefits are starting to outweigh the obstacles.