A former Baird executive joined a fast-growing independent firm in a bid to help it grow even more.
Jarrett Kovics will serve as head of Business Development for U.S. Capital Advisors, which has added about 50 advisors overseeing approximately $6 billion in assets since its founding in 2010.
Kovics, who is based in Houston, previously served as western divisional director for Robert W. Baird’s Private Wealth Management business from 2010 to 2017. He's known U.S. Capital Advisors founder Pat Mendenhall for several years and wanted to join the firm in part because it could offer more flexibility and freedom for advisors, he says.
"When firms grow they tend to make scale-driven decisions, and they ultimately find themselves making decisions like the firms they have recruited away from," Kovics says. "U.S. Capital Advisors hasn't done that."
Wirehouse advisors have been increasingly leaving the big firms for regional brokerages or independent firms in recent years. In 2017, advisors managing about $40 billion in client assets went to independent firms. By comparison, advisors managing about $17 billion joined wirehouses amid recruiting cutbacks at Morgan Stanley, Merrill Lynch and UBS.
In recent years, Houston-based U.S Capital Advisors has been a beneficiary of that trend, recruiting a number of wirehouse brokers and opening new offices in Dallas and Austin. Mendenhall, who worked at UBS prior to founding the firm, expects more recruits to join the firm this year.
"We have some excellent opportunities in Texas. It's easier structurally to recruit and supervise within the state of Texas. But because of Jarrett's reach, there are some perfect teams for what we want to accomplish outside of Texas," Mendenhall says.
Kovics, who had a one-year non-compete with Baird, spent the interim year since leaving the regional firm with his family. He also learned Spanish.
A spokeswoman for Baird was unavailable for comment on his departure.
On recruiting for U.S. Capital Advisors, Kovics is most interested in advisors striving to grow.
"In the absence of that trajectory, you could ultimately end up with a practice that ultimately goes sideways and may end up decretive. It ends up not making sense to invest in those practices," he says. "So we look at individuals and teams who have significant growth goals."
U.S. Capital Advisors expects to be able to continue recruiting despite recent changes in the hiring landscape following the departure of Morgan Stanley and UBS from the Broker Protocol, an industrywide accord that permits advisors switching firms to take basic client contact information with them.
The firm has upped its legal budget ― Morgan Stanley in particular has filed several lawsuits to block former employees from contacting clients ― but Mendenhall emphasizes that advisors can still leave non-protocol firms if they follow the rules.
"It's an awful tactic that you have to sue people to prevent them from leaving," he says, adding, "If you're running a good program and platform, then your advisors should want to stay."