By Michael Wursthorn
A half dozen financial advisers from Barclays PLC's U.S.
wealth-management group, including its former head, have left the
firm to form a multi-billion-dollar independent practice with
national ambitions.
In doing so, they passed on joining Stifel Financial Corp., the
regional brokerage to which Barclays has agreed to sell its U.S.
wealth business.
Former Barclays U.S. wealth head Jack Petersen launched Summit
Trail Advisers on Monday with five partners spread across New York,
Chicago and San Francisco--and with more than $3 billion in client
assets. Mr. Petersen, the firm's managing partner, is based in New
York.
Mr. Petersen, who is starting the firm with the support of
Dynasty Financial Partners, has lofty aims for Summit, from using
his industry contacts to recruit more advisers to opening more
offices to forming an in-house research desk.
"The footprint will be national," Mr. Petersen said. "We will
develop that over time at the appropriate time, and the focus of
this business is our existing clients."
The 49-year-old Mr. Petersen has the experience of running a
large, national firm.
After 10 years as an adviser at Morgan Stanley through the
1990s, he left for Lehman Brothers Holdings Inc., where he
eventually oversaw the firm's regional wealth offices through the
firm's 2008 bankruptcy. He then helped negotiate the unit's sale to
Barclays. Following that, he led Barclays's wealth operations in
the U.S., Latin America and the Caribbean until 2010, choosing to
step down then, take a sabbatical and finally return in 2011 as an
adviser.
About two years ago, Mr. Petersen began exploring the
independent space, a burgeoning segment within the
wealth-management industry that is expected to surpass the
traditional big brokerages, in terms of market share by assets,
before this decade's end.
"What has been most impressive to me from the time I started
looking into this is how positive and excited people are in this
channel," said Mr. Petersen.
Mr. Petersen said he and his partners-- James Cantelupe, Peter
Lee, Tom Palecek, David Romhilt and John Scarborough--plan to add
more offices in other cities. They also aim to build a research
team in New York under the direction of Mr. Romhilt, Summit's chief
investment officer and the former head of manager due diligence at
Barclays.
"It'll be a large research team built over the next coming
months," said Mr. Petersen. "That team will be leveraged by all of
our advisers and will be a similar model to what we used at Lehman,
Barclays and Morgan Stanley."
The cost of building a research team can be onerous, which is
why many independent firms opt to subscribe to third-party research
providers. But Mr. Petersen says proprietary research will be a
differentiator used to support the firm's growth as it looks to
recruit advisers focused on the ultra-high-net-worth client
segment.
For Barclays, the departures are the latest since the
London-based bank agreed in June to sell its U.S. wealth-management
operation to Stifel. Stifel, meanwhile, has been working to secure
the employment of the 180 advisers employed there at the time of
the deal's announcement.
But a number of those advisers have opted to depart from
Barclays instead. So far, at least 12% of Barclays's 180 advisers,
including the six who formed Summit, have turned down offers to
join Stifel. Fifteen advisers managing more than $1.75 billion left
for Merrill Lynch, and one adviser who managed $1 billion in client
assets joined Morgan Stanley recently.
Mr. Peterson and his partners did evaluate Stifel's deal, which
pays Barclays advisers 150% of their last 12 months of production
in exchange for joining the firm. But he said they remained
committed to their plan.
Barclays's sale includes an agreement for Stifel to be the U.S.
private-wealth distribution partner for certain Barclays equities
and credit new-issue securities in the U.S., a key aspect that will
secure the employment of many Barclays advisers for Stifel, Mr.
Petersen and industry recruiters have said. That access to new
issues is "an attractive asset and why many numbers of advisers go
to Stifel," said Mr. Petersen.
For Mr. Petersen and his partners, that agreement wasn't
attractive since it represents a small portion of their
business.
Brokerage recruiters have said they expect many Barclays
advisers to join Stifel, but added that those who were unhappy or
who don't find Stifel appealing will either shop for better deals
or go independent. Firms like Merrill can offer big teams more
attractive offers, sometimes more than double what Stifel is
putting forward, recruiters said.
It wasn't clear how many Barclays advisers have signaled to
Stifel that they plan to join the firm since a spokesman there
didn't respond to a message seeking comment.
Stifel Chief Executive Ron Kruszewski said on June 8, the day
the deal was announced, that the he expected a "significant
majority of Barclays' investment representatives" to join. Mr.
Petersen declined to say whether more Barclays advisers would join
his firm, but he pointed to his leadership roles and time spent
hiring advisers as being an asset during Summit's recruitment of
advisers.
Write to Michael Wursthorn at michael.wursthorn@wsj.com
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