| NEW YORK
NEW YORK Feb 20 A family brokerage team who had
been at Wells Fargo Advisors for more than a decade and manage
more than $300 million of assets for wealthy clients resigned on
Wednesday to start an independent registered investment advisory
Gerald Strid, his sons Erik and Paul and two other brokers
folded the Strid Wealth Management Group at Wells' Berwyn,
Pennsylvania, branch to form Concentus Wealth Advisors in King
of Prussia. The group offers planning services and has
discretion to select investment managers for about 150 wealthy
families. They plan to continue requiring clients to have a
minimum of $1 million of assets and plan to start a family
office with a higher minimum.
"We were already a long way to feeling independent but we
got to the point where it was time to take the last step and be
totally objective and transparent (about the practice)," said
Erik Strid, who joined his father's team in 1992 when they were
at Merrill Lynch.
"There were certain instances where there was a shadow of
doubt in clients' minds about where the 'vig' was for the bank,"
he said, using a gambling term for interest kept by the house or
The Strids also wanted more equity in their practice and to
be less tied to long-term bank stock incentives whose value they
cannot control. Despite some incentives that bank-owned
brokerage firms give advisers to sell products, the Strid team
was successful enough to do what was best for clients without
bank interference and benefited from Wells' vast resources, said
Wells Fargo Advisors is a broker-dealer subsidiary of Wells
Fargo & Co., the fourth-biggest U.S. bank company.
The Strids are part of a small but growing trend of
traditional stockbrokers who are becoming independent advisers,
typically offering fee-based investment accounts and broad
financial planning services.
The number of wealth managers who registered as investment
advisers grew at an annual rate of 8 percent between 2004 and
2012, while brokers at traditional firms fell an average of 1.2
percent in those years, according to Cerulli Associates, a
Boston-based wealth management consulting firm.
To help structure their new business, including creating an
equity structure to help them expand, the Strids have affiliated
with Dynasty Financial Partners, a New York firm founded by
former Smith Barney and Citigroup executives that designs
technology and investment products for independent advisers.
Dynasty helps manage 20 independent wealth management firms
with 63 advisers and about $20 billion in assets. It charges a
small percentage of the non-cash assets managed by its advisory
Concentus, Latin for "harmony," is using Charles Schwab Corp
to hold client assets and execute transactions. The
group will continue to buy research and tactical strategies from
Dorsey Wright & Associates, a Richmond, Virginia-based
"technical" money manager. It will retain web-based financial
planning software from eMoney Advisor, and use Envestnet's
reporting and portfolio balancing tools.
The Strids were part of a small unit at Wells called "Profit
Formula" that allows brokers to keep about 75 percent of the
revenue they collect from clients but charges them for the costs
of running their practices. Most big brokerage firms pay top
brokers about 45 percent of the commissions and fees collected
from clients, but provide overhead and other services gratis.
Wells is not allowing new advisers into Profit Formula, said
brokerage spokeswoman Rachelle Rowe, because it has separate
"channels" to accommodate those who want to be completely
independent and others who are full-time employees. Many of the
most successful of Wells' more than 15,000 retail brokers are in
Profit Formula and tend to move less often, she added.
The bank is likely restricting growth of Profit Formula to
maintain better risk control, since advisers in the unit have
more latitude to manage clients' money, or for reasons related
to profit margin but the Strids did not feel pinched by any
changes, Erik Strid said.
The spokeswoman declined to comment on the Strids or on the
number of Profit Formula advisers. A headhunter and two Wells
Fargo insiders estimated the unit has 350 teams with 1,000