Focus Financial Partners LLC is stepping up the competition for breakaway wirehouse brokers.
The largest aggregation of wealth management firms in the industry today announced five new executive hires intended to improve its Focus Connections offering, which is aimed at recruiting wirehouse advisers to the independent channel.
Mark Hovanic, a former University of Tennessee defensive tackle who worked as a complex and branch manager for Morgan Stanley Smith Barney and
UBS Wealth Management, will spearhead recruiting from the wirehouses, while managing director Richard Gill will continue to manage the overall Focus Connections program.
Matt Sonnen, the former chief operating officer of Luminous Capital LLC, will assist breakaway brokers in setting up and improving their practices.
Luminous, started by former Merrill Lynch & Co. Inc. advisers Mark Sear and David Hou, may be the most successful example in the industry of breakaway brokers entering the independent RIA channel. Launched in 2008, its assets under management had roughly tripled to $6 billion before it sold itself to First Republic Bank last year.
“With Mark and Matt on board, we're expanding the Focus Connections program,” said Focus Financial chief executive Rudy Adolf. “To make these experts available to our breakaway teams is a tremendous opportunity.”
Mr. Adolf said Focus is targeting the largest, most sophisticated wirehouse teams looking to go independent. Examples include a team led by former Merrill Lynch adviser John Beirne — managing roughly $2 billion — that joined Focus last year, and Sapient Private Wealth Management, a team of three Morgan Stanley Smith Barney advisers managing $600 million that joined the firm late in 2011. Mr. Adolf said the firm intends to maintain and possibly increase its pace of recruitment from the wirehouses.
The executive hires signal an increase in competition between RIA aggregating firms like Focus, HighTower Advisors LLC and Dynasty Financial Partners LLC. All three firms are trying to lure wirehouse advisers looking to make the move off Wall Street. Mr. Adolf, however, suggested that the Focus business model is very different from that of HighTower, which has traditionally purchased wirehouse advisers' practices and provided all the infrastructure needed to run their businesses, for a smaller cut of the advisers' revenue than the Wall Street firms would take.
“We either invest in entrepreneurs or we create them,” said Mr. Adolf. “That's very different from going to another employee model like at HighTower.” HighTower has recently launched new alternative business models offering advisers a more independent relationship with the firm.
Focus Financial partner firms now manage more than $60 billion in assets.
