Another team of Morgan Stanley Smith Barney brokers in California, who say they've recently managed about $500 million, has left to set up their own RIA.
Another team of Morgan Stanley Smith Barney brokers in California, who say they’ve recently managed about $500 million, has left to set up their own RIA.
The advisers, Sean Lehmann and Kurt Halverstadt, confirmed today they have created their own advisory firm, the Capital Investment Management Group Inc.
Based in Roseville, Calif., the firm will do business under the name of the Sullivan Group, which is the name of their former MSSB unit.
Their clients’ “pervasive” discontent with Wall Street spurred the advisers to set up their own shop, said Mr. Lehmann, the co-managing partner with the Sullivan Group.
Clients have been particularly concerned about issues such as executive compensation and the Troubled Asset Relief Program, he said.
“We’re trying to distance ourselves from major Wall Street firms,” Mr. Lehmann said.
Schwab Institutional has custody of the assets for the Sullivan Group, which will use Purshe Kaplan Sterling Investments as its broker-dealer.
The new firm’s name, as well as upfront money the advisers took to join Morgan Stanley in 2007, could lead to confusion and conflict between the two sides.
In a statement, a Morgan Stanley Smith Barney spokeswoman said that other three reps from the Sullivan Group will remain at the firm.
Meanwhile, Mr. Lehmann said he expected a “fight to ensue” with Morgan Stanley Smith Barney over a forgivable loan the firm made to the advisers to entice them to join.
He declined to stay how much money, only that it was a “significant amount” and that the advisers wanted no perception of a conflict of interest around their business.
A Morgan Stanley Smith Barney spokeswoman would not comment when asked to confirm the assets under management of the Sullivan Group.
The Morgan Stanley Smith Barney spokeswoman also declined to comment on the loan.
Another team of northern California brokers from Morgan Stanley Smith Barney recently took a similar path.
Last month, a team of MSSB advisers in Menlo Park, Calif., who managed $740 million in assets, left to form their own advisory firm, Three Bridge Wealth Advisors.
