More than a half dozen former Wells Fargo Private Bank financial advisors joined a new fee-only RIA whose founders say they’re restoring the practices’ vanished team structures.
Since Private Wealth Asset Management founders Timothy Kneen and Jeff Shipley launched the Cedar Rapids, Iowa-based RIA on Sept. 3, they’ve added six other advisors who managed a combined $5 billion in assets under advisement with Wells Fargo. Frustration among private bank advisors with a growing pattern of large wealth managers pulling staff and resources from small and midsize cities prompted the founding partners to build their own RIA.
To Kneen, the retreat is part of the “[financial advisor]-centric model that you see being pushed by the large brokerages and large banks” in which firms slash into the teams normally serving high net worth clients in favor of presenting planners as “experts in everything.” Wells Fargo’s Wealth and Investment Management unit
That’s no longer the case, unless they’re operating in huge markets like New York, Chicago or San Francisco, according to Kneen, a 36-year industry veteran who once previously started a different RIA that was later acquired by Focus Financial Partners.
“What our partners experienced is that resources were constantly being taken away from them,” Kneen said in an interview. “You're used to this team structure, and suddenly all of that team structure starts disappearing.”
Private Wealth has five offices with more than 40 employees at its offices in West Des Moines and Cedar Rapids, Iowa; Omaha, Nebraska; and San Antonio and Corpus Christi, Texas, including teams of investment specialists in areas such as oil and gas, real estate, and farms and ranches. Each advisor has a relationship manager to service clients as well.
In recent years, Wells Fargo started backing up its Private Bank advisors in San Antonio “typically by parachuting teams in” from Austin, Houston and Dallas rather than by supporting them with local staff, Shipley said.
“San Antonio is a different dynamic and one that we're very proud to be a part of,” he said, referencing the city’s population of 1.4 million. “It is a large city. It is a city that does deserve to have our team covering the high net worth and ultrahigh net worth clients there.”
Representatives for Wells Fargo Advisors didn’t respond to a request for comment on the departures from its Private Bank.
In the third quarter, the firm’s headcount of financial and wealth advisors dropped by 1,241 year-over-year, or 9%, to 12,552 representatives. The Wealth and Investment unit’s non-advisor corporate headcount tumbled by 2,884, or 10%, from the year-ago period to 26,112 employees. While the firm has indicated that attrition is slowing and the recruiting pipeline is picking up, expenses not relating to performance-based revenue decreased by 6%.
“We have aligned our wealth management business under eight divisional leaders, creating better coordination and efficiency,” Chief Financial Officer Michael Santomassimo said on Wells Fargo’s earnings call earlier this month,
Advisors at Wells Fargo have told recruiter Michael King of Michael King Associates that Private Bank teams outside of the firm's wealth management unit have faced cuts to their services that were not sustained by the ones inside of the division, he said in an interview.
"They restructured and the Private Bank did lose resources," King said. "People have been leaving."
Besides Kneen and Shipley, the advisors joining Private Wealth as founding partners include Heather Vestweber, Dave Arens, Brett Halley, Chris Casey, Debra Wilkens and Rusty Samples. In addition to offering advisors stakes in the firm, Kneen and Shipley have launched a private equity fund that finances the RIA through investments by themselves, friends and family. The firm aims to expand in similar markets and make succession M&A deals.
“It's not just Wells Fargo; these big banks, these big brokerages are moving away from this team concept, and they want to push everything back to the F.A.,” Kneen said. “Secondarily, the belief that, ‘Well, everybody can just pick up and leave and go do what we've done,’... You can't just be a private banker someplace and pick up and start your own shop, because it takes an enormous amount of capital.”
