Rx for new RIA: Hire branch managers
NEW YORK |
NEW YORK (Reuters) - Washington Wealth Management LLC, a new registered investment adviser, wants to build a national business by hiring branch managers when big broker-dealers are firing them.
The advisory firm this week hired John Simmons, a former Morgan Stanley Smith Barney regional manager in San Diego, as its president.
Washington Wealth was founded in December by Tony Sirianni, who was a branch complex manager for Morgan Stanley in Washington, DC, for three years after working for seven years as a broker, complex manager and sales director at Legg Mason's brokerage unit.
"We think we've found a niche for growth," Sirianni said of his strategy to recruit brokerage firm managers and pay them conventionally with a percentage of their office's production. "The wirehouses and regional firms have devalued their managers and what had for a long time been the traditional way firms did business."
Since Morgan Stanley initiated its combination with the Smith Barney unit of Citigroup's in June 2009 to become the biggest retail broker-dealer, it has eliminated dozens of overlapping branches and associated jobs for branch and complex managers.
James Wiggins, a Morgan Stanley Smith Barney spokesman, said Simmons left the firm in March "by mutual agreement." Sirianni's characterization of the treatment of branch managers at firms like Morgan Stanley, he added, "is self-serving and untrue in equal measure."
Sirianni, who received a law degree at night in 1996 while working at Oppenheimer Funds, is pitching his Middleburg, Virginia-based RIA as a twist on a growing array of business models for big-firm brokers looking for greater independence.
They can join independent broker-dealers, such as LPL Financial, that provide compliance services and allow brokers to keep a high percentage of the revenue they produce in exchange for absorbing much of their own overhead costs.
Breakaway brokers also can relinquish their broker licenses and sell advice and planning as registered investment advisers, working for themselves or larger RIA firms.
Sirianni says Washington Wealth blends these options, giving managers and advisers more administrative and technical support than usually found at independent brokerages as well as a more conflict-free fee-based model than brokerages that offer in-house financial products as part of their investment menus.
Washington Wealth covers some transition expenses for advisers setting up offices, pays rent and equipment costs, and will arrange loans to help managers' recruiting efforts, according to Sirianni.
He also is offering "founders equity" to employees joining through mid-2012. Advisers can expect to book about 70 percent of the revenue they produce, he said, compared with the 45 to 50 percent payouts at major brokerages.
Washington Wealth, which uses Fidelity Investments to custody client assets, can do this because it has lower operating costs than full-service firms, he said.
In its first four months of operation, the firm has hired about 12 employees, including two veteran advisers from BB&T Corp's Scott & Stringfellow in Richmond, Virginia. It currently has three offices, with a target of establishing about a dozen by the end of this year.
Sirianni wouldn't disclose total client assets, but says he is in conversation with adviser teams managing more than $1 billion in assets.
"We've added several hundred million dollars in client assets and $3.5 million in revenue production," he said. "We already have commitments to double that."
(Reporting by Joseph A. Giannone, editing by Jed Horowitz)
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