Just 15 months old, Middleburg, Va.-based Washington Wealth Management is growing on a tear, with more than $500 million in AUM and no slowing in sight. Co-founder Tony Sirianni's growth strategy is built on a specific target: wirehouse advisors who are no longer feeling the love.
"Our whole business is solving the problem of the $1 million producer who wants to go independent," says Sirianni, who also is the firm's chief executive. "We would never have been able to get these guys if the wirehouses hadn't made the mistake of treating them so badly."
Named after the country's first president who was known for bucking the establishment and taking advice from his enlisted men, Washington Wealth has recruited 15 advisors in six offices in California, Connecticut, Nevada and Virginia. Sirianni says he has potentially hundreds more advisors waiting in the wings. He expects to double in size by June's end.
The seeds of his business opportunity, he says, were sown a decade ago. Wirehouses decided then that their main income sources would be investment banking, as well as equity and fixed-income trading. "They were like, 'We don't need this retail stuff, it's nonsense,'" Sirianni insists. "And that was true up until the markets turned on them."
Then the retail business languished. Their technology had fallen out of date. Branch managers who once had plum jobs in their hometowns with millions of dollars in annual revenue were taking orders from superiors and replaced by younger, inexperienced newcomers. All this and they were forfeiting 60% of their revenues to headquarters.
WOOING THE FED UP
Shops like these became opportunities for Sirianni. He picked off seasoned and fed-up professionals and offered them a deal. Washington Wealth takes a 30% revenue cut, he says. Its advisors are free to sell any investment product, not just proprietary ones. And there are other advantages.
"Today, my technology is better than what you can get at a wirehouse. We have top products and we're in the cloud," Sirianni says. "A big firm with 18,000 employees just can't do that. They deliberately didn't invest in technology and now they're woefully behind."
To encourage wirehouse advisors to join him, Washington Wealth extricates them from signing bonus and retention-package obligations. It also helps act as a translator from the wirehouse culture to independence.
Custodians, he says, don't fully understand the cultural journey wirehouse refugees must travel to go independent. "They don't speak the language," Sirianni says. He knows the terrain: He's a veteran of Merrill Lynch and Legg Mason until its brokerage operations were acquired by Smith Barney and ultimately Morgan Stanley.
"I needed to become deinstitutionalized,'' he says. "I had to stop thinking the ways I was trained to think for 20 years. The things I had been taught to think were wrong. My training leads me to believe [wirehouses] knew what they are doing but it's just not the case."
CLIENT CULTURE
Sirianni aims, he says, to establish a client-centered business culture. He says the high-profile departure of Goldman Sachs executive Greg Smith in March, by way of a New York Times op-ed, prompted a flurry of calls to Washington Wealth from wirehouse advisors seeking to get out of the channel.
"Unfortunately the cultures that the firms have created promote only those [who] can bully downwards and are craven upwards," Sirianni posted in response to a blog about the Smith affair written by FP Editor-in-Chief Scott Wenger.
By contrast, Sirianni says, he and his colleagues are cultivating a culture that's unafraid to be "touchy- feely. If there's a big jerk who wants to come work for us, we are not hiring him," he says. "Period."
