A $4B advisor goes indie after 37 years at wirehouses
A desire for greater flexibility and fewer conflicts of interests spurred advisor Phil Shaffer to leave Morgan Stanley and form his own RIA, Halite Partners.
"We wanted to launch a firm where we could offer investment excellence without conflicts of interest. In our opinion, it wasn't possible to do that in a wirehouse setting," says Shaffer, whose former team previously oversaw approximately $4 billion in assets.
He is the latest big advisor to move to the independent channel. Several mega teams which made the switch this year have cited concerns about perceived conflicts of interest and a desire for greater control over how their practices are structured.
In Shaffer's case, he was also motivated by trends in the institutional client market.
"There are lots of really good managers who don't want to be on a wirehouse platform. They don't want to pay to play and they don't want to cater to the masses," says the CEO of newly formed Halite Partners.
ATTRACTING NEW TALENT
Shaffer has been in the business for 37 years. He got his start at E.F. Hutton in 1980 and has been with Morgan Stanley and predecessor firm Smith Barney since 1993, according to FINRA BrokerCheck records.
While at Morgan Stanley, his practice largely consisted of institutional clients. Now, Shaffer says he is eyeing new growth opportunities among ultrahigh-net-worth clients, who he believes can benefit from his team's institutional expertise.
"We're not walking away from the institutional market. We'll stay there. But we'll have an additional focus," he says.
"Historically, I'd say we were 70/30 institutional and family wealth," he adds. "I would expect that to be closer to 50/50 going forward."
He also believes he can serve clients who have a heightened awareness of conflicts of interest, not least because of the controversy surrounding the Department of Labor's fiduciary rule. In making the move to an RIA model, Shaffer says he can mitigate conflicts of interest that he couldn't address previously.
"In the institutional space it's always been that way," Shaffer says of clients' demands for transparency. "They want to know who's making what and what they are paying. They don't want it to be opaque."
Even his firm's name, Halite, is intended to evoke transparency, Shaffer says. Also known as rock salt, halite is a clear mineral used to preserve food.
The RIA model also allows him greater control of how his team grows.
Halite is based in Columbus, has an office in West Palm Beach, Florida, and plans to open a third location in Naples. His 11-member team, which includes partners Norm Cook and Lee Caleshu, does not include everyone that worked with him while he was at Morgan, Shaffer says.
Some new team members joined him at Halite because of the possibility of owning equity in the firm — something he couldn't have offered them while at a wirehouse, he notes.
"I'm able to attract a level of talent that I couldn't do before," he says.