In the
largest announced deal of its kind this year, a group of financial advisers who managed $1 billion in assets at
UBS Wealth Management Americas left the massive Swiss-owned brokerage to
start an independent firm with offices in the Western United States.
Veteran brokers Timothy B. Kneen and Clayton E. Hartman traded employment at UBS for an equity stake in Focus Financial Partners and their own advisory firm this month, Mr. Hartman said Tuesday.
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This appears to be the largest team so far this year to move into the independent sphere without the backing of a broker-dealer powerhouse like
LPL Financial,
Ameriprise Financial Services Inc. or
Raymond James Financial Services Inc.
Instead, the founding of IFM Capital Advisors is a victory for the new firm's service provider, Fidelity Institutional Wealth Services, and Focus, one of the largest investors in independent advisers' practices. And it lends early evidence to a prediction by the firm's chief executive, Ruediger “Rudy” Adolf, recently bolstered by a half-billion dollar deal-making war chest, that the year would see
increased movement by brokers to the independent space.
The departing team includes 17 former UBS employees, as well as adviser Thomas A. Dempster, who will run a Sioux Falls, S.D.-based office. Mr. Dempster is a former Republican South Dakota state senator who left office when he reached a statutory term limit.
Mr. Kneen will run the firm's Denver office, while Mr. Hartman will be based in Fort Collins, Colo.
Terms of the cash-and-equity deal were not disclosed, but the team left UBS despite owing the firm money and being entitled to deferred compensation had they stayed, according to Mindy Diamond, president of Diamond Consultants, a recruiter who worked on the deal. Ms. Diamond also said the team entertained a lucrative deal from Merrill Lynch, the
Bank of America Corp.-owned wirehouse, but decided that they would “largely be trading one set of problems for another” by moving to a similar firm.
Mr. Kneen and Mr. Hartman spent six years at UBS. They are also veterans of Smith Barney, the
Citigroup Inc. brokerage that was subsumed by Morgan Stanley.
In an interview, Mr. Hartman said the move would enable the team to better serve the firm's institutional and über-wealthy individual clients, noting enhanced research capabilities, customized account statements and the ability to negotiate better prices with asset managers. He said clients would see lower costs as a result of the move.
Focus actively looks to facilitate so-called breakaway deals by helping wirehouse teams form their own firms or join existing Focus partners. This deal comes on the heels of another that saw a Focus affiliate, Beirne Wealth Consulting, hire a Morgan Stanley team that managed $250 million.
But other industry officials say that despite the attention they receive from the press, moves to the independent space are typically small and do not represent a threat to wirehouses, the four large U.S. brokerages, including UBS, whose nearly 55,000 brokers manage nearly $6 trillion in assets. UBS spokesman Gregg Rosenberg declined to comment for this article.
