Four Wirehouse Myths About Independence

by Austin Philbin

View Original Article – wealthmanagement.com

The transition from a traditional financial institution to becoming a registered investment advisor is an exercise in faith.

From a knowledge perspective, educated consumers are aware of the shift of assets out of banks and brokerage houses into independent custodians. However, statistics alone oftentimes are not enough evidence to provide comfort to a transitioning financial advisor.

Advisors need to understand exactly how the service model their clients have come to expect will be able to be replicated. This service model needs to span the deliverable spectrum, from access to investment products to the utilization of human capital for estate planning or insurance solutions. The beauty of the independent advisory movement is its tremendous level of flexibility, which can create a far superior client experience.

Here are some of the common myths around independence and a few of the most frequently asked questions during the discovery phase of the transition to independence.

Myth No. 1: I won’t be able to provide the same breadth of products and solutions.

The reality is that the evolution of financial services has created an open architecture distribution model versus a proprietary captive one. Steve Schwarzbach, co-founder and partner of Icon Wealth Partners states: “We like to refer to our platform as Open Architecture Plus. We essentially had no issues transferring our clients’ assets, including most alternative investments. Now we have an even broader, more robust set of investment solutions than at our previous firms.”

Existing companies are looking for new revenue streams and new companies are being created to focus specifically on an approach to appeal to a wider range of clients. Having worked with incredibly skilled advisors, who can have really complex end-client needs, I’ve seen firsthand how structures like individual retirement accounts and products such as physical commodities can be transitioned to independence. There are also a wide variety of human capital solutions from estate planning specialists to family wealth coaches that can be employed to provide expertise to end clients. Finally, the flexibility around how to charge clients for various services makes it easier to cater to a wider variety of client types compared to rigid institutional pricing structures.

Myth No. 2: My clients won’t believe their assets are safe with a startup.

The financial acumen, quality of advice, and trustworthiness of the financial advisor don’t change when clients leave a bank. Further, the only startup aspect of the majority of newly minted registered investment advisors is the legal entity formation (in other words, paperwork). Assets are held at custodians, like Charles Schwab, Fidelity, and Pershing/Bank of New York Mellon, that safeguard trillions of dollars and have been in business for many, many years. Additionally, if advisors have been proponents for third-party money managers for investment management, they will have as large if not an even larger line-up of managers to choose from in the independent environment. Finally, both the custodians and the RIAs should have protections in place, with E&O / D&O Insurance, Fidelity Bonds, etc., to provide liability protection should fraud or a similar event occur.

Brian Buckley, founder of Buckley Wealth Management in Las Vegas, explains the importance of the custodian in the following way: “Having a quality independent custodian is a real plus for our clients—they have a second set of eyes on their accounts. BWM acts in the clients’ best interests in terms of investment management; and our custodian devotes its vast resources to safeguarding the clients’ assets, providing independent reporting directly to the clients and enabling the clients to access their accounts anytime from anywhere. Having a third-party custodian solidifies our ability to act as a fiduciary, giving us far less restrictions from a products and services stand point.”

Myth No. 3: I will just do it myself.

One of the first questions that I ask someone who’s interested in starting an RIA is: “Do you want to be an entrepreneur?” It’s a really critical question because I feel confident that, with enough understanding of a value proposition, individuals can be “sold” on leaving a traditional institution. What cannot be sold is the fire required to start a business. Assuming one can be great at everything related to business is a dangerous risk. We live in an outsourced business model world within the RIA community. The strength of this model is that it allows financial advisors to focus on core competencies like investment management, relationship management and financial planning, while shifting responsibilities for things like technology, compliance and bookkeeping to other professionals. Instinctively, the costs for goods and services increase when a business employs outsourcing; however, when you add the human capital costs, along with the time/energy it takes to perform certain tasks, the true cost to a profit and lost balance sheet is often a wash at best.

Blake Pratz, co-founder and managing partner at Icon Wealth Partners helps to put things in perspective: “Even the most entrepreneurial among us can’t possibly cover the entire gamut of what it takes to set up a new RIA. In the end, true do-it-yourselfers end up with less time to focus on their clients.”

Myth No. 4: Technology will solve all my problems.

One of the drivers for financial advisors to evaluate the independent space is the recognition that technology is rapidly becoming a crucial part of the overall value proposition. Large financial institutions have dual issues with technology that prevent them from fully extracting the value of the progression of technology: (1) legacy systems built on top of each other; and (2) managing to a lower common denominator to limit risk.

However, technology alone does not make anything better. Successful independent financial advisors/advisory firms understand how to build scale through the effective use of technology. They automate as much of their practice as possible. They find new and creative ways to allow their clients to visit with their money and strengthen their brand recognition by white-labeling the solutions. It’s a commitment because many times with technology a step back, in order to learn new processes, results in a massive leap forward.

To sum it up, the independent space does provide financial advisors with the ability to serve the needs and interests of their clients. Sometimes the process behind the delivery of certain products is different; however, the sources available expand exponentially. Through proper education and due diligence, an outstanding offering that is tech-enabled becomes not something that you need “faith” to find, but rather a reality. To quote the late George Michael, “You gotta have faith.” But you also need proper guidance to make informed decisions.

Icon Wealth Partners Visits Annual Top Golf Tournament Fundraiser Hosted by Young Life Greater Houston Region

Icon Wealth Partners is very proud to support Young Life Greater Houston Region at their annual Top Golf Tournament fundraiser. This amazing non-profit works with youth from disadvantaged socioeconomic backgrounds by providing them with much needed encouragement, mentorship and an unforgettable annual camp experience!

Houston-Based Independent Advisory Firm, Icon Wealth Partners, Welcomes Brando Palazzo as a Wealth Advisor

HOUSTON—September 07, 2018 – Icon Wealth Partners, a privately-held, independent wealth advisory firm headquartered in Houston, TX, today announced they have expanded their wealth advisory team with the addition of Brando Palazzo.  Mr. Palazzo brings over eight years of wealth advisory experience and is focused on bringing Icon’s unique model of wealth management and financial advice to the next generation of high net-worth investors.

“We are very excited to welcome Brando Palazzo and his clients to Icon Wealth Partners,” states Blake Pratz, Founder and Managing Partner of Icon Wealth Partners.  “His values and business strategies are aligned with our firm and will continue to build on our focus to provide a premier experience for the families and individuals we serve.”

According to Mr. Palazzo, “Icon Wealth Partners is a dynamic firm with impressive resources and experienced professionals.  I am excited to introduce additional capabilities to my clients, including financial planning and customized portfolio construction.  In particular, I look forward to leveraging the experience of Mike Cregan, Managing Director and Head of Fixed Income Strategies, in tailoring fixed income portfolios customized to my client’s specific needs.  Resources such as these will provide an exceptional client experience and will help better serve my existing clients and attract new ones.”

Says Founder and Managing Partner Mark McAdams, “Brando exemplifies our strategy of attracting like-minded advisors who value true independence in serving their clients.  We continue to look to grow the Icon team by continuing to add advisors at all career levels who share our values and culture”.

About Brando Palazzo

Over his 8+ year career, Mr. Palazzo has developed a diverse clientele of high-net-worth individuals and families including private business owners, attorneys and Fortune 500 executives, as well as family estates and trusts.

Prior to joining Icon Wealth Partners, Brando spent over eight years at Greenbriar Financial where he was a Financial Advisor as well as the firm’s investment research analyst.

Mr. Palazzo graduated from Houston Baptist University with a degree in Science.  He has also completed courses in investment banking, accounting and finance at the Investment Banking Institute in Dallas, Texas.  Brando resides in Houston with his wife and is an active committee member of Young Life Houston Central, a non-profit organization that works with inner city youth.

About Icon Wealth Partners

Icon Wealth Partners was launched as an independent advisory firm in February of 2017 by three founding partners – Mark McAdams, Blake Pratz, and Steve Schwarzbach. Icon Wealth Partners is based in Houston, Texas and is one of the largest independent advisory firms in Texas. Icon Wealth Partners serves a select clientele of high net worth individuals, business owners and professionals. Icon Wealth Partners is also a member of the Dynasty Financial Partners Network. For more information, please visit www.iconwp.com.

Houston-Based Independent Advisory Firm, Icon Wealth Partners, Expands Investment Team With the Addition of Industry Veteran Mike Cregan as Managing Director-Head of Fixed Income Strategies

NEW YORK—June 11, 2018 – Icon Wealth Partners, a privately-held, independent wealth advisory firm headquartered in Houston, TX, today announced that they have expanded their investment team with the hiring of Mike Cregan, Managing Director and Head of Fixed Income Strategies. Mr. Cregan will also join the firm’s Investment Committee.

At Icon Wealth Partners, Mr. Cregan’s responsibilities will be to develop, manage and enhance the firm’s fixed income capabilities across multiple strategies including ultra-short tax-free, taxable and tax-free fixed income portfolios.

He will work closely with Mark McAdams, one of the firm’s Founding Partners and head of the firm’s Investment Committee. Icon Wealth Partners serves a select clientele of high net worth individuals, business owners and professionals across the US.

“Mike brings extensive investment expertise in developing customized fixed income portfolios for high net worth investors. With Mike’s experience and background, we are confident that we will be able to provide our clients a superior, more competitive fixed income solution with a more personalized overall client experience.” said Mr. McAdams. “We are thrilled to welcome Mike to the Icon team.

According to Blake Pratz, Founding Partner, “Adding someone with Mike’s experience and background is a key element to our overall growth strategy. We have positioned Icon Wealth Partners as a destination for high performing advisors by investing in a first class platform and outstanding people. For like-minded advisors, we provide the scale and resources to compete and win in the marketplace and we plan to continue to expand on this business strategy through the selective addition of successful financial advisors.”

According to Mr. Cregan, “Icon Wealth Partners is an innovative firm with impressive capabilities and experienced professionals. I am excited to work with our clients to provide a more tailored experience managing their fixed income portfolios. As Icon attracts additional advisors to the firm, I look forward to working with those advisors and their clients to provide truly customized fixed income solutions”.

A 30+ year veteran of fixed income management, Mr. Cregan began his career in 1985 in Paine Webber’s institutional fixed income group in New York City. While at Paine Webber, he worked with some of the nation’s largest institutional fixed income clients including major money center banks, Fortune 500 insurance companies, and institutional money managers. In 1990, Mike moved to Houston to continue his career in institutional fixed income markets with Underwood Neuhaus, and later Texas Commerce Bank, Chase Securities, and JP Morgan Securities.
In 2002, Mr. Cregan was recruited to manage Houston-based financial advisory firm Avalon Advisors’ taxable and municipal fixed income platforms. Under his leadership, his group initially managed $75 million in assets and by 2011 was managing over ~$1.5 billion of fixed income assets.

Mr. Cregan is a graduate of Washington and Lee University in Lexington, VA where he earned a B.A. in Economics in 1985 while playing on the Generals basketball team.

About Icon Wealth Partners

Icon Wealth Partners was launched as an independent advisory firm in February of 2017 by three founding partners – Mark McAdams, Blake Pratz, and Steve Schwarzbach. Icon Wealth Partners is based in Houston, Texas and is one of the largest independent advisory firms in Texas. Icon Wealth Partners serves a select clientele of high net worth individuals, business owners and professionals Icon Wealth Partners is also a member of the Dynasty Financial Partners Network. For more information, please visit www.iconwp.com.

Houston Food Bank Visit

Icon Wealth Partners made another visit to the Houston Food Bank where we participated in their Backpack Buddy Program.  We helped in preparing 4,650 backpacks which will provide 27,900 meals to Houston children in need.  We are honored to work with the nation’s largest food bank and look forward to participating in more projects in the future.

https://www.linkedin.com/feed/update/urn:li:activity:6401841147425226752

 

Breakaway Advisors Absolutely Love Their Independence

View Original Article – Financial Times

It’s almost comical. One hundred percent of former wirehouse or regional-brokerage advisors in the independent RIA channel are happier for having made the move. That’s according to a blind survey of 450 FAs by Dynasty Financial Partners — a sponsor that, as an infrastructure provider to breakaway RIAs, has to be pleased with the result.

Indeed, Dynasty’s CEO Shirl Penney says the survey confirms “advisors who choose independence are happier, less stressed and better able to serve their clients.”

Supporting this claim, no less than 96% of those polled think they “have greater upside” in their “earning opportunity” as a result of going independent; 96% say they now “have the ability to realize their business vision;” 93% agree they “have greater opportunity to build equity value;” and 93% reckon they “have more control over important business decisions.”

And the big numbers keep coming. Eighty-two percent of ex-wirehouse FAs now in RIAs say the transition is directly attributable to their ability to “provide conflict-free advice,” and 72% believe their independence “allows them more freedom to focus on clients’ unique needs,” according to Dynasty’s Independent Advisor Survey.

Of course poll outcomes like that are bound to raise eyebrows. So we asked some breakaway advisors for their views on the lopsided feedback their peers provided in the Dynasty survey.

All we got was confirmation.

“We’re much happier at Summit Trail,” says Jack Petersen, a co-founder and managing partner of Summit Trail Advisors, a New York-based RIA with regional offices in San Francisco, Chicago, Boston and Chevy Chase, Md. “It was stressful in the first six months” after the firm’s mid-2015 launch, he admits. “But after that we started hitting our stride.”

Of Summit Trail’s 39 employees, Petersen says “34 of us came out of the wirehouse world,” so he figures the firm, which manages about $5.5 billion — including about $1 billion brought in this year organically — has a keen sense of what it’s like providing financial advice in different business models.

The biggest strike against major brokerages like Morgan Stanley, Merrill Lynch and UBS Financialcomes down to “the law of large numbers,” says Petersen, who began his career with Morgan Stanley before joining Lehman Brothers’ wealth management division and its post-meltdown successor unit at Barclays. “That’s no one’s fault: they have to make sure they’re protecting the firm by creating consistent policies and procedures.”

Though that’s a prudent course for trillion-dollar companies, it’s tough to provide truly customized services from a monolithic platform. Working from an RIA, however, allows for such tailoring, which Petersen sees as necessary to providing fiduciary services.

Advisor Blake Pratz, who left UBS early this year to co-found Houston-based Icon Wealth Partners, which manages about $650 million, agrees with that assessment.

Further, says Pratz, the Dynasty survey result of 100% agreement among breakaways that they’re in better boats now is nothing to wonder at given conditions at the wirehouses — “whether you want to look at compensation, the fact they’re devoid of cultural spirit or the fact that management there is out of reach.”

And though at breakaways the peripheral parts of life at a wirehouse might be missed — for example, some aspect of a particular reporting interface — Steve Schwarzbach, who left Morgan Stanley with FA Mark McAdams to co-found Icon with Pratz, says “You don’t make this kind of move if you’re going to focus on minor details.”

Rather, says Schwarzbach, “You do it because you have a strong feeling you’re going to make more money and you’re going to serve your clients better.”

And when an advisor puts their career on the line and takes action on that belief only to see it confirmed, the result is a surge of relief and happiness. “That’s what I think the survey points to,” says Schwarzbach.

“But,” cautions Pratz, “that doesn’t mean there aren’t frustrations” that come with independence. “That could be the two clients you thought of as sure things hesitating to follow; it could be the Friday morning call saying the system is down and you’re responsible for getting it back up.”

For all that, though, running your own firm means you’re likelier to head home at the end of the workday having given “good advice, and solved problems for clients,” according to Pratz. “You feel re-engaged, like you’re part of something bigger, and you can see it in your clients’ reactions and responses.”

Summit Trail’s Petersen understands that feeling. Since going independent, he says he’s “never been this excited to come into work every day.”

The unanimity on that score among breakaways reflected in the Dynasty survey makes sense to Jeff Spears as well. The president and head of wealth management at Fort Point Capital Partners in San Francisco used to run Sanctuary Wealth Services, a Dynasty-like support-service provider to independent RIAs.

Ex-wirehouse advisors who have joined or started RIAs “are happy to not be associated with the brand and management of their old firm,” Spears tells FA-IQ.

For some FAs, especially at a certain level of seniority, being tied to a big brokerage is simply a drag on business, Spears explains. Continuing in the relationship past that point exacts an “emotional toll” on advisors who stick it out. Conversely, advisors who go independent at that stage are apt to feel relief and happiness as their employer-related stress diminishes, he adds.

 

Email info@iconwp.com to discuss opportunities to go independent with Icon Wealth Partners.

Click here to learn more about Icon Wealth Partners 

Ricardo Mihaly Earns the CFP® Designation

Ricardo Mihaly, Director of Planning & Investments at Icon Wealth Partners has been authorized by the Certified Financial Planner Board of Standards (CFP Board) to use the CERTIFIED FINANCIAL PLANNER™ and CFP® certification marks in accordance with CFP Board certification and renewal requirements.  Ricardo has worked at Icon since the firm’s inception and has over 20 years of experience in the financial services industry.  At Icon Ricardo is responsible for working closely with the firm’s clients to meet all of their financial planning needs.

Three Texas Advisors Break Away Into Mega-RIA

View Original Article — Financial Advisor

Three Texas wirehouse advisors managing a combined $750 million broke away from their employers to form a giant RIA, Dynasty Financial Partners announced on Thursday.

Two long-time Morgan Stanley advisors, Mark McAdams and Steve Schwarzbach, have joined forces with Blake Pratz, a UBS veteran, to form Icon Wealth Partners, an independent advisory firm in Houston.

“We all feel passionately that we can serve our clients’ needs better as an independent firm,” said Scwarzbach in a released statement. “There is a tremendous potential for us to now broaden our existing relationships and develop new ones. We believe strongly that the independent model is the best way for us to grow our business, both organically and inorganically.”

Dynasty Financial Partners advised the Icon team on its transition and will continue to provide assistance with technology, operations, investments and branding, the company said.

Icon becomes one of the largest financial advisories in Texas and the partners plan to recruit additional breakaways into the firm, according to Dynasty CEO Shirl Penney.

Icon also announced that it is working with Fidelity Institutional Wealth Services, Black Diamond and Callan.

The partners will serve a clientele of high-net-worth individuals, business owners and professionals, with particular expertise in working with law partners, according to Icon.

“We plan to build upon our successful program working with attorneys and their firms, helping them plan for the specific financial challenges they face,” said Pratz in a released statement. “As an independent firm, we can now offer them customized services and personalized financial plans.”

Wirehouse advisers with $750M in combined AUM go indie with Dynasty

By Tobias Salinger

View Original Article — OnWallStreet

Three wirehouse advisers managing $750 million in combined client assets broke away to launch their own firm with help from Dynasty Financial Partners, according to the company.

Mark McAdams, Blake Pratz, and Steve Schwarzbach opened Icon Wealth Partners last week after more than two years of considering the move, Pratz says. The Houston-based firm makes 40 in Dynasty’s network, double the number of rival HighTower, which also recently added recruits in an increasingly heated competition between the two for RIA business.

“We’ve been following this independent space for several years and doing due diligence,” Pratz says. “So the timing was right. The evolution of this business moving towards the independent space is growing.”

Icon reported $261.8 million in assets under management, with 26 to 100 clients and 877 accounts, in its first SEC disclosure last week.

The founding partners met over 20 years ago when they all worked at Smith Barney, according to Pratz. He specializes in working with both individual attorneys and law firms, while McAdams and Schwarzbach focus on ultrahigh-net-worth clients.

The three Icon founding partners wanted to embrace fiduciary standards in a way, Pratz says, they couldn’t at their wirehouse posts. Pratz had worked five years at UBS, while McAdams and Schwarzbach led a high-net-worth team at Morgan Stanley.

A spokeswoman for Morgan Stanley confirmed the move but declined to comment. A spokeswoman for UBS did not immediately respond to a request for comment Thursday.

Icon marks Dynasty’s third breakaway team in the past two months.

Dynasty increased its footprint as well. A Morgan Stanley adviser managing $600 million used its platform to form his own company earlier this week. An adviser formerly at investment bank Robertson Stephens also started his own firm with Dynasty last month.

Pratz says going with Dynasty was “an easy decision” for him and the other Icon founding partners.

“Dynasty far and away was the leader in this space,” Pratz says. “We could not ask for better partners now and going forward. So we’re excited for the journey with these guys.”

Pratz began his advisory career in 1984 at Dean Witter, eventually working at both Citigroup and Morgan Stanley, according to FINRA BrokerCheck records.

McAdams broke into the industry in 1993 with Citigroup and worked at Morgan Stanley for seven years. Schwarzbach worked a similar amount of time for Morgan before leaving.

Additionally, Icon hired Cindy Pickett and Jennifer Moore from UBS and Annette Latigue from Morgan Stanley to its client relationship team. Ricardo Mihaly, another onetime Morgan hand, serves as senior director of planning and investments.

“We are honored to welcome Blake, Mark and Steve along with their team to the Dynasty community,” CEO Shirl Penney said in a statement. “Icon Wealth Partners immediately becomes one of the largest financial advisory firms in Texas with the intent to attract seasoned, like-minded advisers seeking independence.”