RIA structured as an independent branch network rises in Virginia's horse country on Fidelity platform
Elizabeth’s note: The Washington in Washington Wealth Management refers not to the nation’s capital, but to the man himself: George. I wondered if CEO Tony Sirianni had consulted some branding expert or management guru to pick the name, but it turns out that Sirianni is a fan of the nation’s first president. I’ve been working on the guidebook for Washington’s home, Mount Vernon – a project that predates my role at RIABiz. One of Washington’s great gifts was his ability to focus on what was important at any given time. During the Revolutionary War, that was keeping his army together. During the Presidency, it was keeping the country together.
It’s hard to tell what role Washington Wealth Management will play in the independent revolution, but it’s clear that for now Sirianni is focused not on AUM or on starting offices in particularly flashy locales, but on finding the branch managers he thinks can be successful for his strategy.
An RIA with a long time horizon and a strategy to grow using former wirehouse branch managers is emerging from the horse country around Middleburg, Va.
With its headquarters in a centuries-old former inn, in the middle of the town known as an old-money capital, four-month-old Washington Wealth Management has lured five advisors so far: a team of three from Morgan Stanley Smith Barney in December and two from Scott & Stringfellow, who work in Richmond. Today, it announced the addition of Jordan Ball, who had long careers at Paine Webber and Scott & Stringfellow before retiring from the latter firm four years ago to be an independent consultant. He’ll be a regional vice president, heading the Richmond office.
Four more offices
Tony Sirianni started the firm in December, and says he wants to have four more offices in built around strong branch managers before the end of this year. New England and New Jersey are among the places where he’s seen strong interest, as well as the Deep South and the West Coast.
The former executive director for Morgan Stanley Smith Barney ran a complex of brokers for that firm, and in a previous life was an executive and branch manager for Legg Mason. He has a friendly, low-key style, and his firm has a good story, notes Danny Sarch of Leitner Sarch Consultants, who is recruiting for it.
“He sells … he’s a sincere, bright good guy who has sat in the seat,” Sarch said. “Tony’s firm values the branch manager … allows them to build franchises while paying themselves nicely. I think it’s appealing to the entrepreneurial nature of the really good branch managers.”
Sarch also drew a contrast between Washington Wealth Management and HighTower, the venture-capital rollup that’s on a fast growth trajectory. See: HighTower doubles recruiting staff and seeks green pastures of Morgan Stanley Smith Barney brokers.
Advisors who join Washington Wealth Management within the first 18 months will all become equity owners of the firm with a 10-year-vesting period; advisors who join later will have the chance to earn equity.
Sirianni says he wants to put power into the hands of branch managers, who can then recruit smaller advisors from the wirehouses as well as independent advisors that might be tired of being out on their own.
“The big firms don’t see the value in (branch managers), which is crazy because that’s how they built themselves,” Sirianni said.
RIABiz wrote about another firm, Houston-based U.S. Capital Advisors, which aims to recruit former wirehouse branch managers. U.S. Capital Advisors went on a blitzkrieg of recruiting using money from investors. See: A HighTower-like consolidator rises from Texas ground.
Washington Wealth Management is financed by Sirianni and one other local investor, he said. The goal is that the company will be self-funded, though it has .
Mark Tibergien, CEO of Pershing Advisor Solutions, said in an earlier interview that his firm is working more frequently with breakaway wirehouse branch managers who are leveraging their capabilities in the independent advisory realm. Not only can these executives maximize the potential of producers, but they have loyal team members and can attract them to newly formed practices.
Washington Wealth Management custodies at Fidelity Institutional Wealth Services and uses Mid-Atlantic Capital Corp., which clears through National Financial Services, as its broker-dealer. Sirianni expects that the firm will have a fee and commission mix of about 80/20, and it’s considering moving on to the Envestnet Asset Management platform. It also uses Capsaicin for its office technology.
An 'aha’ moment
Sirianni said moving to the independent space was by no means an easy choice for him. A Legg Mason alumnus, he stayed at Smith Barney and then at Morgan Stanley Smith Barney for a year after the acquisition. Last summer, he said, he resigned and began to look at what he wanted to do.
“It was an ‘aha’ that took about four months,” he says. He kept thinking of all the reasons that brokers don’t go independent. Eventually, he built his business plan around them:
• A lot of advisors owe money
• The costs of going independent are prohibitive
• Advisors don’t want to do their own management
• Advisors don’t want to be alone in a basement somewhere
• Advisors worry about compliance
With a payout that will typically be 70%, Washington Wealth Management, he says, solves those problems. The firm loans money to advisors to pay off any obligations to the wirehouses. It provides the office space and technology as part of the deal. “It’s plug-and-play,” he says.It also handles all the compliance and management for a practice – and the branch manager structure is designed to support advisors.
The Bouchard Group, which had $200 million of AUM, came to Washington Wealth Management in December and is based in Middleburg. The husband-and-wife team, which includes another advisor and several support staff, had worked with Sirianni at Legg Mason. Unhappy with the atmosphere at MSSB, they had been looking for a different landing place for a while. They’d gone to check out Stifel Nicolaus, but its growth trajectory made them nervous that the company was preparing itself to be sold.
“We’re going to wind up back at the evil empire, we told ourselves,” says Saundra Bouchard.
MSSB filed a lawsuit against Washington Wealth Management alleging Sirianni solicited the Bouchard Group; the case went to arbitration and was settled, but Sirianni said Washington Wealth Management did not have to pay anything to the wirehouse. Both sides agreed to walk away from the arbitration, he said.
Bouchard said she is still working to bring clients over, while MSSB is still actively pursuing them. In addition to the money it manages for individuals, the team manages about $30 million for small 401(k) plans. It’s just signed its first plan onto the fee platform that Fidelity offers for 401(k)s, and Bouchard says that in the future, all of her team’s new platforms will be fee plans.
The Bouchards knew Sirianni from their days at Legg Mason. They’re comfortable with him and the idea that Washington Wealth Management aims to be around for the long haul.
“We don’t want to wake up one day to be owned for a wirehouse,” Sirianni said. “That’s not what people are signing up for.”