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Under protocol pressure, $250M UBS team jumps to Steward Partners

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A $250 million team left UBS last week for independent firm Steward Partners, joining an exodus of talent from the wirehouse just prior to its exit from the Broker Protocol.

Advisors David Bernacchia and Darren DeQuatro had been considering a move for about a year, but moved up their planned departure after UBS announced it would join Morgan Stanley in leaving the industry accord, which permits departing brokers to take basic client contact information.

"When Morgan Stanley moved on protocol, then if you weren't reading the tea leaves, you weren't paying attention. So we made sure if UBS followed suit, we would be prepared," Bernacchia says.

Bernacchia, an industry veteran of 30 years, and his partner joined the New York office of Steward Partners, which is affiliated with Raymond James Financial Services. They made the switch in part because of the independent firm's partnership model and because it offered more support than they would get if they were to launch their own RIA.

"Frankly, I don't want to run my own business. I want to interact with my clients and focus on investment management and the issues that are most tangible for them. I do not want to negotiate with landlords or do payroll," Bernacchia says.

They also discounted the idea of moving to another wirehouse. The big firms are too bureaucratic compared to the independent space ― "a much more attractive option," DeQuatro adds.

Bernacchia and DeQuatro had been with UBS since 2008, according to FINRA BrokerCheck records. They previously worked at Morgan Stanley.

A UBS spokeswoman was not available for immediate comment.

Bernacchia and DeQuatro weren't the only UBS advisors to make a move before its protocol exit. A $1.2 billion team led by advisor Kurt Sylvia left to join J.P. Morgan Securities in Palm Beach, Florida.

But such moves aren't made on the fly, recruiters say.

"If you were in advance talks and planning, then you could have accelerated," says headhunter Jeff Bischoff.

Advisors who weren't ready the way Bernacchia and DeQuatro were, couldn't rapidly accelerate the process because firms often conduct their own due diligence before hiring a broker, and that process typically takes several days, recruiters say.

A massive acquisition, the possible end of the Broker Protocol and other issues will shape the industry in 2018.
November 28

The upheaval in the recruiting landscape occurs as independent firms and regional brokerages have engaged in aggressive hiring.

So far this year, Steward Partners has hired 30 advisors overseeing about $3.5 billion in client assets, according to the firm. Last month, the Washington, D.C.-based wealth manager picked up four advisors managing more than $400 million in client assets. That group opened Steward Partners' 12th office, in Paramus, New Jersey.

By exiting the Broker Protocol, wirehouses could make it more difficult for advisors to make career changes by attempting to legally enforce non-solicitation agreements.

But while that might discourage some brokers from leaving, it will not necessarily end all advisor moves, industry insiders say, noting that brokers made career changes before the protocol was created in 2004.

It's unclear if other firms will exit the accord. Merrill Lynch and Wells Fargo have previously declined to comment. Raymond James, which has more than 7,000 advisors, has defended the industry agreement.

Steward Partners CEO Jim Gold says his firm is bracing itself for whatever comes.

"I think what will really be important is that advisors be very well prepped by the firm they are joining so they know what's allowed, not allowed and how they can avoid becoming the victim of a [temporary restraining order]," Gold says.

"At Steward Partners, we are moving quickly. We've had calls with protocol attorneys. We'll be rolling out for 2018 our non-protocol transition playbook," he adds.

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