Revenge of the branch managers: Washington Wealth is rapidly putting ex-wirehouse workers in play nationwide

The ambitious plan of Washington Wealth Management to establish itself as a nationally ubiquitous RIA with offices helmed by jilted – and therefore motivated – ex-wirehouse branch managers is starting to look like it just might work.

And the firm is only eight months old.

“It’s clever. This story has resonated with every one I’ve talked to,” says Danny Sarch, principal of Leitner Sarch Consultants, advisory headhunters based in White Plains, N.Y. See: Former MSSB exec powers up Washington Wealth Management as branch-manager franchise.

It’s resonated so well that the company finds itself dealing with a high-quality problem, according to Tony Sirianni, founder and CEO of Washington Wealth Management.

“Our biggest issue has been overwhelming demand from financial advisors,” he says. “It’s a good thing but it’s a challenge. A whole bunch of people came in. We have scalability because we have managers on the ground.”

Sirianni says the firm is fielding inquiries from hundreds of interested advisors and managers currently or formerly employed by wirehouses or regional brokers. For another start-up based on branch managers, see: A HighTower-like consolidator rises from Texas ground.

Middleburg and Richmond, Va.-based Washington Wealth Management was founded in December by Sirianni, who was a former executive director for Morgan Stanley Smith Barney. Previously, he was a branch manager for Baltimore-based Legg Mason.

They were expendable

There is some irony here: Sirianni is taking the same approach that once made wirehouses mighty: decentralizing control by recruiting Rotary Club-joining managers with crack salesmanship skills. What with shrinking margins and the pressure to squeeze profits, branch managers – much like travel agents – have been viewed as largely expendable.

Wirehouses managers are growing increasingly dissatisfied as they face more pressure with less pay. Sarch compares their situation to that of a NFL football coach who must straddle the interests of both the players and the owners. In happier days, managers took home 3% of gross revenues generated in their offices. “That’s been slashed and slashed” to about 1%, he says.

Danny Sarch: The manager’s cut of
an office’s gross revenue has been
slashed to about 1% from 3%.

Of course, there are fat-cat branch managers who add little value, Sarch allows, but this is not a problem for Washington Wealth. The wirehouses are cutting loose good and bad managers alike, making for a fertile recruiting pool.

New recruits

As a result, Washington Wealth has signed on industry veterans with impressive pedigrees.

A key hire is Jeff Bouchard as the Southwest regional director with oversight of Arizona and the Los Angeles and Las Vegas areas.

A 25-year industry veteran, Bouchard joins Washington Wealth from Morgan Stanley Smith Barney, where he served as associate divisional director for its Western Division. Previously, Bouchard was the national sales director and managing director for Wachovia Securities and a complex manager for the firm’s Woodland Hills, Calif. branch location.

Most recently, Whit Whitehouse joined Washington Wealth as the Los Angeles branch director at the same time as Michael Ferrante and Peter Sansevero came aboard as branch directors in San Diego and Seattle, respectively.

Whitehouse, a 17-year industry veteran, has held sales management and consulting roles with Citigroup and Fidelity. Most recently he was the director of advisory sales and practice management in the Central California region for Wells Fargo Advisors.

Ferrante served as branch manager and first vice president of the firm’s Park City, Utah office. Most recently, he was the branch manager for Morgan Stanley’s Palm Desert, Calif. office and Morgan Stanley Smith Barney’s San Diego, California office. See: HighTower is starting to run the poaching table in Palm Desert.

Sansevero has worked for over 34 years in the financial services industry in compliance and operations roles as well as sales and management positions with Merrill Lynch, Merrill Lynch Credit Corp. and Morgan Stanley Smith Barney. In his last position, Sansevero was the northwest regional business services officer for MSSB, serving northern California, Oregon, Washington and Alaska.

De facto franchisees

Washington Wealth’s business model turns these individuals de facto franchisees, working their connections and vetting a pipeline of referrals flowing into Sirianni, who then aggregates advisors – as 1099 subcontractors – in their geographical areas. The company will serve as their platform for trading and other support capacities relating to setting up and maintaining a business.

The platform is already being successfully adopted, according to Ross Wilkinson, director of development for Washington Wealth Management, in a release.

“The advisers we already have are experiencing the power of this platform and the tremendous impact it can have on their business and how they serve their clients. This new group of directors will quickly ramp up the number of advisers we serve, and we’re ready for it.”

Managers first, offices second

But first they’ll need a place to hang their hats. Branch managers in Seattle, Las Vegas, Los Angeles and Palm springs, Calif. do not yet have offices nor have they signed on 1099 contractors.

“We’re not going to build a 10,000 square-foot office in Seattle and hope we get some guys,” Sirianni says.

Indeed, by standards of most aggregating efforts, Washington Wealth is growing on a bootstrap basis.

“We don’t buy anybody. We try to do it in the form of a loan. We’re making it easy for them to move…Schwab will tell you they lose eight of 10 prospects. They don’t speak the same language as the financial advisor,” he says.

Tim Oden, senior managing director of business development, Schwab Advisor Services says Schwab is doing just fine in its recruiting efforts.

“Schwab has a long, successful history of supporting transitioning teams to independence including those from wirehouses. We’re very pleased with the volume of advisors coming our way from wirehouses as well as other sources.” See: Breakaway Movement II is kicking in, says Schwab and Fidelity execs

Sarch says this highlights the real issue: “The average wirehouse advisor likes the old model.”