Greg Fleming's $43 billion Rockefeller Capital has hired 19 advisor teams from top-tier wealth firms in 7 months. Execs lay out where it's focused next.
Just two years after launching, the pandemic has put Rockefeller Capital to the test as the firm that's been aggressively poaching talent from larger rivals has had to set up shop for newcomers remotely. But Greg Fleming's firm, which oversees some $43 billion in client assets as of mid-May, has continued on a hiring spree in recent months, adding 19 new teams this year. Rockefeller is eyeing a sixth division in Chicago to establish over the next six months to a year, and will hire a division leader for that region, too. It's also setting its sights on four other markets: Northern New Jersey, Walnut Creek, California, Scottsdale, and Houston. In interviews with Business Insider, Rockefeller executives described how the firm has fared through the volatility, where it's planning to grow, and how they think about the next generation of financial advisers. Visit Business Insider's homepage for more stories.
By the time Wall Street's closing bell sounded on March 18, US financial markets were in disarray: the S&P 500's plunge had triggered a circuit-breaker that afternoon. The Dow Jones industrial average plunged to a three-year low. Investors scrambled to make sense of the coronavirus pandemic's economic impact and the devastation that could play out in the coming months, even though no analyst, economist, or executive really had a clue. Greg Fleming had been there before. Sort of. During the great financial crisis, he served as the president and chief operating officer of Merrill Lynch from 2007 to 2009. Bank of America bought the massive, ailing brokerage in September 2008. There are some parallels between this period and the last, he said March 18 in an interview aired on CNBC, speaking about the economy broadly: "This uncertainty, and the really palpable fear that starts to build into the system. Are we going to get on the other side of this, what is it going to take to get there, and how long will it last?" He's been steering a different ship through this crisis. Fleming serves as the chief executive of Rockefeller Capital Management, the New York-based wealth manager and investment firm that debuted in early 2018 and is owned by Viking Global Investors' private equity arm, a trust representing the Rockefeller family, and company executives. With the stock market's extraordinary volatility and the challenges with setting people up for work remotely, the pandemic has put the firm to the test just two years after its launch. But Rockefeller has continued on a hiring spree in recent months. Read more: Greg Fleming's Rockefeller Capital is building up its Washington presence by luring junior talent and veteran advisers from the biggest wealth managers Through mid-July, Rockefeller's private wealth arm — one of the firm's four business lines, alongside family office services, asset management, and strategic advisory — has taken on 19 new financial adviser teams in 2020, and now counts 34 teams with 67 advisers overall. Through May, Rockefeller had 493 employees. The firm now oversees some $43 billion in client assets through mid-May, which includes net assets under management and advised assets. In recent interviews with Business Insider, Rockefeller executives described how the firm has fared through the volatility, where it's planning to grow, and how they think about the next generation of financial advisers. In growth mode Rockefeller is maintaining earlier plans to grow its financial adviser base to as many as some 200 advisers in the coming years, and is mapping out new US markets to enter. In mid-2019, the firm said it was setting its eyes on a base between 100 and 200 financial advisers over the next five to eight years, a target executives are sticking with. The firm has primarily hired teams of advisers from the big wirehouses like UBS, Morgan Stanley, and Merrill Lynch, the world's largest wealth managers which have largely cut back on aggressively hiring experienced advisers and instead focus on training up new ones internally. The new hires haven't slowed. In early June, Rockefeller hired a Houston-based team overseeing some $500 million in client assets led by former UBS financial adviser Shay Scruggs. Later in the month, the firm nabbed a New Jersey-based team of advisers from Merrill Lynch who oversee some $750 million in client assets, as AdvisorHub reported with both moves. Executives say the virtual onboarding process hasn't been painful; the firm uses Zoom or Microsoft Teams to stay connected. "Our thought here was to be laser-focused on a particular segment of growing clients, and focus on your top-tier advisers in the marketplace who are at an inflection point largely in their careers, and how they're serving their families," said Chris Randazzo, the president of private wealth management and head of technology and operations, who is based in New Jersey and splits time between an office there and headquarters at 45 Rockefeller Plaza. "I would argue that we're more connected today with each of our employees and our teams," Randazzo said. "We're certainly more connected with our clients. What we're seeing now is everyone is fully functional from their homes, or vacation homes." The firm is also growing at a time when the very white financial services industry tries to renew commitments to racial diversity, and wealth managers are laser-focused on adding diversity to their adviser ranks. Through June 30, 23% of Rockefeller's employees are non-white; 41% of employees identify as female, and 59% male. A spokesperson did not respond to a request for comment regarding whether the firm has any Black financial advisers. "As we continue to build our firm, we remain committed to attracting a diverse, eclectic, and inclusive group of outstanding professionals that reflect all aspects of the society in which we live and work," a spokesperson said. Read more: The biggest US wealth firms won't disclose adviser racial diversity data despite renewing commitments to make their mostly white adviser forces more inclusive Like Fleming, who was the head of Morgan Stanley Wealth Management before leaving in 2016, Randazzo previously held senior roles at Morgan Stanley and Bank of America's wealth and investment management businesses.
He's helped oversee the creation of five divisions across the US — northeast, southeast, south-central, northwest, and southwest — each with its own market leader. In April the firm hired Brian Riley, a former executive with First Republic, as head of its San Francisco office and the managing director of private wealth management's pacific northwest division. Like Riley, Rockefeller's other division leaders have come from large or notable boutique wealth managers. For instance, Michael Outlaw, who joined the firm in August 2018 as a managing director overseeing recruiting and managing wealth advisers in the eastern US, joined from Morgan Stanley. He opened Rockefeller's Atlanta office. Rockefeller is eyeing a sixth division in Chicago to establish over the next six months to a year, and will hire a division leader for that region, too. It's also setting its sights on four other markets: Northern New Jersey, Walnut Creek, California, Scottsdale, and Houston. Over the next three to five years, he could see Rockefeller having a presence in some 20 to 25 cities. Staying selective Still, they are not trying to have a foothold in every single market. They're trying to retain the prestige of a brand name that oozes opulence and splendor like no other, after all. The name synonymous with New York's high society and influence across industries has roots in the days of oil barons, when John D. Rockefeller founded Standard Oil in 1870 and became the first billionaire in the US. The team decided early on "that we didn't want to have a Rockefeller office in every city, on every street corner," said Chris Dupuy, Rockefeller's national field director for private wealth management who works in tandem with Randazzo and other private wealth officials in that business line. The firm will likely continue hiring primarily from major wealth managers and investment houses similar to JPMorgan Securities, Dupuy said. Before joining Rockefeller in November 2018, Dupuy was the president of a unit inside Focus Financial Partners geared toward drawing advisers from legacy wirehouses to independence.
"One of the biggest challenges you hear from folks who are working at the big firms right now is that they don't feel great about the idea of bringing a son or a daughter now into the business, given the changes that they've seen take place at those firms," Dupuy said. "What they like about us is that we're going to give them a lot of autonomy with respect to how they grow and build out their team." The wirehouses have become "heavy-handed" over time in the style that they oversee teams of advisers, with a lack of freedom in how they grow and operate their practices, he said. The firm has also grown the family office segment, run by Tim O'Hara, where clients typically have at least $50 million invested, though there is no concrete minimum. The business has 25 dedicated client advisers (distinct from financial advisers, who are in the private wealth unit), four of whom joined this year. O'Hara, who was president and CEO of Goldman Sachs' family office and wealth-planning unit Ayco before joining Rockefeller in May 2019, plans to hire some 25 client advisers over the next three years. Read more: Greg Fleming just hired the former chief of Goldman Sachs' elite financial planners, and it shows he's serious about staying true to the Rockefeller name Hiring the next generation While Rockefeller mounts itself as a force within the independent wealth management space, the industry is grappling with a dire dynamic where far more advisers are leaving or retiring than are entering. "We love a team that's been established where they've clearly been thinking about that next generation," Dupuy said. "Where they've put advisers in place within the team structure that perhaps are younger or are from a different background that would play better with the next-gen type of client." The firm has also convened a next-generation advisory council inside the firm, O'Hara noted, like other firms who convene groups of children of clients and other younger people associated with the firm in an effort to keep connections — and assets — in the family after its current clients are long gone. The council involves people including some Rockefeller family members like Ariana Rockefeller, William Rockefeller, and Ryan Rockefeller; James Rothschild, a trustee for his family's foundation; and Lacey Ann Tisch, the daughter of businessman Andrew Tisch. Read more: Wealth managers are racing to lock down next-gen financial advisers as they prepare for a wave of retirements. Here are their playbooks for recruiting, succession, and pay. Grace Yoon, the head of business development and strategic partnerships, who joined the firm the month it launched from Morgan Stanley, heads up that group that meets four times per year. But they're not looking to train up advisers in a centralized way like its larger rivals do, with thousands of new advisers entering the rigorous multi-year programs. Randazzo doesn't envision building that out. "I don't think they have a lot of success over a long period of time," he said, referring to the programs. "We're going to try to remain small, where all our teams know one another — every one of us, from Greg and myself down, are intimate with each of those teams. We know their strengths. We try to develop together as a firm and as individuals, and the same goes with understanding and being intimate with our client base. We think about all of those things," Randazzo said. "I know I went a little long-winded on that answer, but it's important to us."SEE ALSO: The biggest US wealth firms won't disclose adviser racial diversity data despite renewing commitments to make their mostly white adviser forces more inclusive SEE ALSO: Greg Fleming's Rockefeller Capital is building up its Washington presence by luring junior talent and veteran advisers from the biggest wealth managers SEE ALSO: Greg Fleming just hired the former chief of Goldman Sachs' elite financial planners, and it shows he's serious about staying true to the Rockefeller name Join the conversation about this story » NOW WATCH: What it takes to be a PGA Tour caddie
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DIGITAL WEALTH MANAGEMENT: Leading robo-advisors have held onto consumer appetite amid the pandemic — here's what incumbents can learn from them to maintain their grasp on a $43 trillion market
Summary List Placement Insider Intelligence publishes thousands of research reports, charts, and forecasts on the Fintech...Summary List Placement Insider Intelligence publishes thousands of research reports, charts, and forecasts on the Fintech industry. You can learn more about becoming a client here. The following is a preview of one Fintech report, Digital Wealth Management. You can purchase this report here. Although they only hold a fraction of the more than $43 trillion in investable assets under management (AUM) in North America, digital wealth management adoption is set to grow in the future — presenting an opportunity for fintechs and incumbents alike. Digital wealth managers, also called robo-advisors, came into existence after the financial crisis in 2008, when fintechs aimed to simplify and democratize wealth management services. They use technology such as AI algorithms and machine learning to manage users' assets, while often relying on a hybrid model including human advice to enhance the customer relationship. Insider Intelligence estimates that just around $330 billion was invested in robo-advisors in North America in 2019. However, we expect that number to increase significantly over the next few years to reach $830 billion by 2024 — presenting an opportunity to fintechs and incumbents already in the space, as well as financial institutions (FIs) that want to get involved with digital wealth management. Offering digital wealth management services allows players to make their operations more efficient and offer users a broader suite of services, as customers are increasingly expecting digital and automated services from their wealth managers. Additionally, it can help FIs lure in younger demographics that can't yet afford conventional wealth management, and later graduate them to more premium offerings, as they build their wealth. At the same time, digital wealth managers are facing their first economic downturn amid the coronavirus pandemic, which could impact the sustainability of their businesses moving forward if they don't adjust their services. In The Digital Wealth Mangement Report, Insider Intelligence explains what the current digital wealth management market looks like, what makes the segment worthwhile for incumbents, and how they can find success in the space. We profile the four biggest digital wealth managers in North America in detail to provide insight into their onboarding process, portfolio management, and pricing, as well as how they've been affected by the pandemic and what they're doing to accommodate changing customer needs. Our outreach process involved exclusive interviews across three providers in May 2020, while Personal Capital's profile is based on desk research and email conversations with the company due to interviewee unavailability. Additionally, we discuss why more incumbents should offer robo-advisory services, and define a digital maturity model for robo-advisors to showcase important features and capabilities that incumbents should take note of to find success. The companies mentioned in the report include: Acorns, Betterment, BlackRock, Blooom, Charles Schwab, Ellevest, FutureAdvisor, Invessence, InvestCloud, M1 Finance, Personal Capital, RobustWealth, TD Ameritrade, Vanguard, Wealthfront, Wealthsimple Here are some key takeaways from the report: Although digital wealth managers only hold a fraction of investable AUM in North America, robo-advisor adoption is set to grow in the future — presenting an opportunity for fintechs and incumbents alike. While some incumbent FIs already offer digital wealth management services, not all have gotten in on the trend, despite its many benefits — and of those that have, not all have found success. The pandemic represents a potential threat to digital wealth managers, but there are ways to navigate the crisis and support their customers. For that reason, digital wealth management still represents an attractive opportunity for incumbents looking to enter the space. Betterment, Wealthfront, Wealthsimple, and Personal Capital all rely heavily on technology like algorithms to build portfolios for customers and support their wealth management experience, which helps them to offer their services at a lower cost when compared with conventional offerings. In full, the report: Outlines the benefits of launching a digital wealth management offering Details the Digital Wealth Management Maturity Model used to assess the progress that players are making in the space. Spotlights the four biggest fintech digital wealth managers in North America and what they offer. Highlights how technology is being used across the services, and how this impacts pricing. Discusses how these players have been impacted by the coronavirus crisis Interested in getting the full report? Here's how you can gain access: Join other Insider Intelligence clients who receive this report, along with thousands of other Fintech forecasts, briefings, charts, and research reports to their inboxes. >> Become a Client Purchase the individual report from our store. >> Buy The Report Here Are you a current Insider Intelligence client? Log in and read the report here.Join the conversation about this story »
Why Morgan Stanley's $7 billion bid for a storied asset manager gives it a 'remarkable leg up' on rivals and signals more deals to come (MS)
Summary List Placement Sustainable investing, big stable businesses, utter size, and tailored products for investors: Morgan...Summary List Placement Sustainable investing, big stable businesses, utter size, and tailored products for investors: Morgan Stanley's move to buy Eaton Vance at a premium is a deal made for modern Wall Street. The New York investment bank said Thursday it would acquire the Boston-based investment manager, which oversees some $500 billion in assets, and its affiliates in a deal worth $7 billion in cash and stock. Coming just six days after Morgan Stanley closed on its all-stock E-Trade acquisition, the deal highlights the bank's transformation toward more stable operations from once-core sales and trading under Chief Executive James Gorman within an industry that has shifted significantly since he took the reins a decade ago. The tie-up would create a $1.2 trillion asset management behemoth alongside Morgan Stanley Wealth Management, one of the largest wealth managers in the world with 15,400 financial advisors and nearly $2.7 trillion in client assets as of the end of June. Eaton Vance would beef up Morgan Stanley's position in customizable fund offerings, with Eaton Vance's Parametric funds, and sustainable investments, through its well-known Calvert investment manager and research business, industry analysts and consultants said in interviews. Read more: Morgan Stanley snaps up asset manager Eaton Vance in $7 billion takeover as its buying spree continues "Gorman's strategy over the last 10 years, but especially in recent years, has been to enhance its wealth and investment management position," Ken Leon, a bank analyst and director of equity research with CFRA Research in New York, said in a phone interview on Thursday. "But in terms of scaling investment management with funds, it would be difficult to do that organically. With acquisitions, they are able to move up the league tables in terms of asset management," Leon said. For Morgan Stanley, pairing its monster force of advisors with more products On a conference call to discuss the deal with analysts on Thursday morning, Gorman said the tie-up fit into Morgan Stanley's shift to "more balance sheet-light, more durable businesses." Gorman has previously emphasized wealth management's stabilizing effect on the bank, which was in dire straits coming out of the great financial crisis. Its wealth business is known as a global force. But by size, its $665 billion asset management business isn't the same titan as the largest asset managers like BlackRock (managing some $7.3 trillion assets) and Vanguard (with some $6.2 trillion at the start of the year). "I think it gives it a somewhat remarkable leg up on the competition," said Neil Bathon, the founder of asset management research and consulting firm FUSE Research Network, in an interview on Thursday. Bathon emphasized the benefit for Morgan Stanley of having Calvert's capabilities, with sustainable investing products for clients a growing trend, one that has attracted a record amount of flows this year. And he called the Eaton Vance-owned Parametric mutual fund family, comprised of custom-made separately managed accounts, a "prize" in this deal. The availability for customization and tailor-made products for clients over cookie-cutter options is a major industry trend, Gorman said on the call with analysts on Thursday. "Its products speak to the generational requirements of today's investor — responsible investing, data-driven, and customized solutions," Michael Spellacy, senior managing director for capital markets at Accenture, told Business Insider. Read more: Big investors like Apollo and Carlyle are clamoring for a piece of the $30 trillion ESG space. We spoke to 15 insiders about how they're ramping up hires, raising money, and striking data-driven deals. But Eaton Vance couldn't "distribute it enough in a way that gets a profitability advantage," and Morgan Stanley has the built-in network, he said. Morgan Stanley, for its part, is already the largest distributor of Eaton Vance funds, Gorman told the Wall Street Journal. One East Coast-based Morgan Stanley financial advisor, who requested anonymity because he was not authorized to speak with a reporter, said he was most interested in the fixed-income capabilities Eaton Vance could bring to the firm, along with Parametric. As consolidation takes the industry by storm, insiders expect more to come The deal, which the firms expect to close during the second quarter of 2021 and sent shares of Eaton Vance and other publicly traded asset managers higher on Thursday, is the latest sign of widespread consolidation in the money-management industry. Mid-sized asset managers have been pressured as fees for products and services in the space have plunged in recent years, driving a need for size to eke out profits. Franklin Resources bought Legg Mason earlier this year, and the Wall Street Journal reported in late September that activist investor Trian Fund Management was building stakes in asset managers Invesco and Janus Henderson with an eye to consolidation in the industry. Read more: Franklin Resources and Legg Mason's $4.5 billion merger is the latest in a wave of asset manager M&A — here are 4 more potential takeover targets "You can expect waves of consolidation in asset management because most of the product is the same. You can't carve differentiation unless you have world-class distribution," Accenture's Spellacy said. Over the summer, Gorman foreshadowed that a deal in the space would be coming during a virtual conference the bank hosted, according to a transcript on the investment research platform Sentieo. The firm wasn't done with acquisitions after E-Trade, he said. "Gorman's cementing his legacy," one Morgan Stanley wealth advisor said. SEE ALSO: Big investors like Apollo and Carlyle are clamoring for a piece of the $30 trillion ESG space. We spoke to 15 insiders about how they're ramping up hires, raising money, and striking data-driven deals. SEE ALSO: Franklin Resources and Legg Mason's $4.5 billion merger is the latest in a wave of asset manager M&A — here are 4 more potential takeover targets SEE ALSO: Why Morgan Stanley, which has 15,000-plus financial advisers catering to the super-wealthy, is buying a discount broker known for its talking baby ads Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
Wealth management giant Merrill Lynch wants its worst-performing markets to catch up and just created a new role to oversee their progress
Merrill Lynch, Bank of America's wealth management arm, has created a new role, the national business...Merrill Lynch, Bank of America's wealth management arm, has created a new role, the national business development executive. It's appointed a former market executive, Craig Young, to the post. Young will focus on leveling advisers' performance across the US, aiming to ensure that "there's not much distance between our best-performing and our worst-performing markets," said Andy Sieg, the president of Merrill Lynch Wealth Management, told Business Insider in an interview. Visit BI Prime for more wealth management stories. Bank of America's wealth management business has created a new leadership position to help its less successful wealth adviser markets catch up with its strongest performers. Merrill Lynch Wealth Management on Tuesday named Craig Young, previously a market executive with the firm on the East Coast, as its first national business development executive. Young will be based in New York and report to Andy Sieg, the president of Merrill Lynch. He'll focus on leveling advisers' performance across the US, aiming to ensure that "there's not much distance between our best-performing and our worst-performing markets," Sieg said in an interview with Business Insider on Tuesday. Merrill and its wirehouse rivals have dialed way back on recruiting experienced financial advisers, and have instead focused on boosting productivity from their existing headcount. Sieg said that the new position will be focused on staying on top of performance across the country's many markets and making sure that local leaders are being held accountable. "At the market level, there's substantial difference in terms of how strongly we're performing," he said. A spokesperson declined to provide examples of markets with disparate performance levels. More generally, market executives tend to track measures including market profit and loss, customer acquisition and growth revenue. Young will be responsible for bringing consistency across the 105 markets the wirehouse has across the US. Market executives will continue to drive their own markets, but Young's role will be to help them devise better execution plans and hold them accountable. "We created a several-day program to help enhance the skills of market executives. We followed that up with the creation of market plans so that each of our 105 markets is operating against a written plan," Sieg said. "This is now kind of a next step, which is how do we actually build a function into our organization that's helping us create that level of consistency?" Young, who was previously the market executive for the area that encompasses Westchester, New York and Greenwich, Connecticut, joined Merrill in 2015 as an associate market executive in Los Angeles. He later served as the market executive in Pasadena, California from 2016 to 2018 before moving to the New York area. He'll now oversee internal organizations including Merrill Lynch's Advisor Growth Network and the Market Executive Strategy Council, which partly aim to forge communication between financial advisers and business leaders. Merrill Lynch reported some $2.6 trillion in client assets and around 17,400 financial advisers and financial solutions advisers as of December 31. Young will travel to different markets and spend time with local leaders "in their markets, and in their offices, so that he can keep a close pulse on how the strategy is being executed" on the ground, Sieg said. Before Young got into the wealth management business, he earned his bachelor's degree in business administration from California Polytechnic State University, where he played football as a running back. "As a young kid, I wanted to do something in business," he told the Los Angeles Sentinel newspaper in 2015. "Football was my passion but as a college student, I was also interested in finance. I felt that business would allow me to bring who I am into what I do and to put my best skill sets to work." Like its traditional wealth management competitors, Merrill Lynch has grappled with the industry's changing relationships and roles. The business isn't attracting newcomers like it used to, and firms are focusing heavily on recruitment and robust internal training efforts to draw top talent and show them the ropes. Business Insider first reported last month that Merrill Lynch is expanding the scope of its training programs, opening up development resources to its 6,500 client associates. More than 111,500 advisers will retire in the next decade, representing more than one-third of industry adviser headcount and assets, according to estimates from the industry research firm Cerulli Associates.SEE ALSO: https://www.businessinsider.com/bank-of-america-merrill-lynch-wealth-management-changing-training-program-2020-1 SEE ALSO: The head of Merrill Lynch says the firm has zero interest in buying a robo-adviser — and that comes as wealth-tech startup launches are plummeting Join the conversation about this story » NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.