Why This Multibillion-dollar Advisor Team Left UBS
The former UBS advisor team that now makes up Procyon Partners is a testament to why top producers make the leap from wirehouse to independence, despite threats of legal retaliation. More than 10 months after the new firm was launched, and even with a case pending in arbitration, the team believes it made the right move.
The five-person team decided to bolt from UBS because they were getting “increasingly frustrated” with the wirehouse after years of being prevented from providing their clients with better service, says Jeff Farrar, New York-based chief operating officer at Procyon.
The team’s departure from UBS was anything but amicable. Phil Fiore founded Procyon in early 2017 and was joined by the other ex-UBS advisors in early June. UBS filed a temporary restraining order against Fiore, Farrar, and two other advisors – Louis Gloria and Thomas Gahan – shortly before Procyon was launched in mid-June. Another ex-UBS advisor, Chris Foster, who also joined Procyon, was spared from the lawsuit.
That legal battle ensued long before UBS withdrew from the Protocol for Broker Recruiting in December. At issue at the time was whether the advisors violated non-solicitation agreements, among other things, to poach clients from UBS. At stake was $8 billion in institutional assets and more than $400 million in private wealth assets managed by the advisors at UBS.
A U.S. district court judge ruled against UBS, enabling Procyon to proceed with business as usual. Farrar says his team was able to retain “several billion” dollars of their client assets from UBS. A case filed by UBS against four of its former employees in Finra’s arbitration forum remains pending.
The team’s disenchantment with wirehouses started long before most of them joined UBS in 2009, according to Farrar, who had been previously at Merrill Lynch since 1999. Fiore and Gloria also had been previously at Merrill Lynch since 2005.
“We first looked at going independent about 10 years ago [when they were at Merrill Lynch], but that was the depths of the financial crisis, so we weren’t sure it was the right environment to hang out our shingle,” Farrar says.
The “primary driver” for wanting to go independent was to better serve the needs and demands of their clients, Farrar says. He cites as examples being previously only held to suitability instead of fiduciary standards; having only one lending business source for their clients; and not having control over how resources were spent on manpower and technology.
“Our prior firms tend to manage to the least common denominator, and so the large and more sophisticated teams that demand more support just got a lot more frustrated,” Farrar says, noting that the team “outgrew” the wirehouse business model.
Farrar says the team wanted to design a firm from the ground up. “We knew what we wanted and didn’t want. We put together a firm that was good for our employees and clients and would be nimble.”
Setting up their own shop “wasn’t a simple process,” Farrar says, which is why the team was “glad” to be part of the RIA network of Dynasty Financial Partners.
He says the team had proposals and offers from other firms, including private equity firms that wanted to fund their startup. But they opted to join Dynasty, which guided the team through a 192-item checklist during its transition to independence. Procyon is the 45th and latest team to join the RIA network.
“Economics were important but what was more important to our team was the sense of control,” Farrar says. At UBS and Merrill Lynch “there were always arbitrary bureaucratic rules” about headcount, salary caps or job descriptions, to name a few examples, he says.
At Procyon the team has control over how money is spent – whether it be on hiring a CFP who travels around the U.S. educating potential clients about retirement, on preferred technology systems, or even on office space and furniture, according to Farrar.
“We’ve had so many opportunities come up that we didn’t even think about before, like an insurance benefits practice or exploring partnerships,” he says. “That never would have happened in our previous firms. We have new potential sources of revenue that didn’t even exist before and so many avenues of possible growth.”
Farrar says the team has received “a ton of calls” from wirehouse advisors who personally know them. “They’re asking us what it’s really like to go independent, how does it really work. There’s a lot of interest.”
UBS has declined to comment on its arbitration case against the former employees who launched Procyon.