The Global Institutional Consulting group of Bank of America Merrill Lynch last week recruited from Convergent Wealth Advisors LLC three institutionally focused advisers with an average of more than 20 years' experience and managing more than $2.7 billion in assets
George Dunn, Peter Dunne and Bruce Wall joined the GIC group Friday, bringing four other colleagues and assistants with them. Their production levels were not disclosed. “These three advisers specialize in servicing foundations and endowments, with a smattering of retirement plans, as well,” said Tom McAuliffe, managing director of the GIC group. “They bring great experience to work with our other advisers.”
They'll probably be bringing the bulk of their assets with them. Typically, financial advisers who work with institutional clients have a more difficult time keeping assets in tow when they change firms — particularly if they are coming from a large firm. That's less so when advisers jump from smaller organizations, said Mr. McAuliffe, who joined BAML in April. “On the institutional side, smaller players often have difficulty keeping assets when advisers leave the firm,” he said.
Prior to joining BAML, Mr. McAuliffe served as director of Graystone Consulting, Morgan Stanley Smith Barney LLC's institutional consulting group. Graystone is the largest such group amongst the wirehouses, managing approximately $100 billion, according to Mr. McAuliffe. He also served as director of Institutional Consulting at UBS AG, which has about $50 billion in institutional assets under management. The GIC group currently advises on about $60 billion.
Mr. McAuliffe said it's an interesting time in the industry, from a strategy perspective. For one thing, the performance of the investment markets over the last five years has left pension funds with an average funded status of between 80% and 85%. Many are moving to a more discretionary model, said Mr. McAuliffe, looking for more service from their consultants and advisers to help close the gap. “Institutional investors typically meet on a quarterly basis, and a lot goes on from the beginning to the end of a quarter these days,” he said.
To accommodate them, service providers will have to bring a lot of resources to the table. “Firms need a broad spectrum of solutions and an understanding of how they all work together,” Mr. McAuliffe said. “For smaller firms, it may be a bigger challenge.”
The GIC group currently has 70 advisers on staff, and Mr. McAuliffe plans to have 75 by the end of the year. Judging by the recent hires from Convergent, he may find them in the smaller consulting firms. “I see significant opportunities to grow our adviser numbers and our client base,” he said. “Consultants at the niche regional consulting firms are always looking for the best solution sets for their clients.”
Laura Smith, director of marketing for Convergent, stated in an e-mail that the departure of the advisers was “altogether amicable and in the best interests of everyone involved.” She also stated that Convergent's business remains strong. “We are adding new clients at a faster pace than ever before, and these changes will allow us to better focus some of our resources on future growth opportunities,” she wrote.
