Sergio Ermotti, chief executive officer of UBS Group AG. Two UBS advisers and a client service associate left the firm Thursday, just ahead of its exiting the Protocol for Broker Recruiting.
A team of brokers managing about $228 million in client assets has left UBS Group AG for the independent ranks just ahead of the firm’s exit from a recruiting pact that will make it more onerous for defections.
Veteran financial advisers Jason Bratt and David Nanson and client service associate Ashley Colvin left UBS to join True Private Wealth Advisors, a registered investment adviser in Salem, Ore., the parties said Tuesday.
The addition of the UBS team brings True Private Wealth Advisors’ client assets to about $900 million, about three times the total when the firm was launched by a group of former Merrill Lynch advisers in 2012. The firm is part of the Dynasty Financial Partners network, which helps advisers break away from brokerage firms and offers support services such as payroll management and technology.
The move is the latest sign the migration of advisers from Wall Street firms toward independent rivals isn’t abating. Jason Herber, a founding partner at True, said a growing number of adviser teams from the big four brokerages—Merrill, Morgan Stanley, UBS and Wells Fargo & Co.— are opting for independence because they want more choice and flexibility for their clients.
A new retirement-savings regulation, known as the fiduciary rule, has underpinned the years-long movement of advisers toward independence, where they have more control over their business and compensation. Registered investment advisers have for decades been required to act as fiduciaries, meaning they must put clients’ interests before their own. By contrast, brokerages operate under a “suitability” standard, allowing brokers to sell the products that are more lucrative so long as they meet the customer's investment objective and risk profile. In 2017 this was modified, but only for retirement accounts, and even that has been partially delayed until July 2019.
Recent changes to a longstanding recruitment pact have contributed to some brokers’ decisions to jump to independent firms.
Shirl Penney, Dynasty’s chief executive, said the moves by Messrs. Bratt and Nanson and Ms. Colvin were in the works before UBS last week said that it would leave the Protocol for Broker Recruiting, but the planned exit “cemented the decision on when they would go.” The team left UBS on Thursday, the day before the protocol exit went into effect.
The recruitment pact, designed to reduce legal costs tied to broker moves, has made it easier for advisers to change firms and take their clients with them. Observers say recent decisions by UBS and Morgan Stanley to leave the accord highlight the pressure brokerages are under from advisers and are meant to make it tougher for brokers to leave.
Protocol departures “will add an extra step” for advisers looking to leave firms that back out of the pact, Mr. Penney said, as they will have to plan for potential legal challenges. Dynasty offers loans to financial advisers in transition, and the firm also gives advisers the option to sell a piece of their revenue for cash.
By Lisa Beilfuss
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