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Big loss for Morgan Stanley as $6B team goes indie

A Morgan Stanley team that managed more than $6 billion quit to go independent with help from Dynasty Financial Partners, making it one of the largest advisor moves of the year so far.

This most recent mega departure potentially represents a big loss for Morgan Stanley, which has otherwise maintained low attrition levels since leaving the Broker Protocol. The firm has sued several brokers who left for rivals, arguing that they violated non-solicitation agreements.

Morgan’s retention rates have also benefited from a reduced recruiting environment: the wirehouse and rivals Merrill Lynch and UBS have cut back on hiring initiatives in recent years.

The 11-member team, led by advisor Jason Fertitta, made the move in part because of what they felt was the superior technology offerings available to RIAs.

“The technology has gotten good enough in that it’s not just a lateral move for our team; it’s an upward move,” Fertitta says, noting that many vendor options available at the big firms are also available to RIAs.

Jason Fertitta financial advisor Americana Partners

MarketCounsel principal Brian Hamburger agrees.

“This break is far more about the attraction of the independent RIA model than the firm they’re leaving,” says Hamburger, whose firm advised Fertitta’s group on its move. “The truth is, teams of this caliber are well cared for and have no shortage of respected colleagues they have to leave behind.”

A Morgan Stanley spokeswoman confirmed the team’s departure but declined to comment further.

Fertitta, who started his career at Lehman Brothers and moved to Morgan Stanley in 2008, works with family offices, corporate executives and business owners among other clients, he says.

The team also has plans to expand the range of investment offerings for their clients. “We’re very excited about private placements, co-investments. I think we’re in a good environment to help families with those types of investments,” he says.

The following 17 teams oversaw about $75 billion in assets. The firms ending the year with prize recruits include a diverse cast: regional BDs, wirehouses, boutiques and RIAs.
December 14

The team, which maintains offices in Houston, Austin, and Dallas, christened their new firm Americana Partners. Landing upon a name was quite challenging because so many wealth management names have been taken, Fertitta says.

“We had a short list, and Americana just rang as an entrepreneurial name. We also wanted one that exhibited a desire to be more than just a Texas based wealth management firm,” he says, adding the team has expansion plans.

The move is a coup for Dynasty, which specializes in helping breakaway brokers go independent, and is the latest in a string of major moves for the firm.

Earlier this year, citing high real estate costs and compensation expenses, Dynasty announced it was moving its headquarters from New York to St. Petersburg, Florida. Dynasty employees and executives are expected to be in St. Petersburg in June. The firm will maintain its office in midtown Manhattan as well as client service locations in Chicago and San Francisco.

Last fall the platform provider added a new Enterprise Group headed by Ed Friedman to provide assistance to advisory firms with at least $1 billion in AUM. The new division was part of Dynasty’s client segmentation strategy, CEO Shirl Penny said at the time. “A $5 billion firm has needs that are unique and different than a $500 million firm,” he said in an interview with Financial Planning.

But some industry observers — and even some RIA executives who are in the Enterprise Group — saw the new business model as a retention play to prevent attrition as Dynasty’s core business, based on being a one-stop shop for breakaway brokers, matures.

Dynasty is also making significant investments in its M&A and capital strategies efforts. The firm is offering to help — and lend money — to firms who need assistance buying or selling in the red hot M&A market. It also offers advisory firms partial liquidity by purchasing a minority of the RIA’s equity in the form of a Revenue Participation Note, which allows advisors to exchange a minority of their revenues for cash.

Fertitta’s other team members include Billy Busch, Robert Wellington, Sheldon Busch, Josh Caltrider, Johnathan Schnitzer and Ben Athens.

Fertitta says that the client response so far “has been gratifying and gives us confidence that we made the right decision.” He also says his departure from his old office was bittersweet.

“I made a lot of great friends at Morgan Stanley. They’re great people and I will miss them, but I feel this is the right move for us at the right time,” he says.

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