Stagnant assets and a series of executive changes at The Presidio Group, a $3.5 billion wealth management firm in San Francisco, have put expansion plans on hold and left the firm working to rechart its course.

Co-founder Brodie Cobb, who suffered a devastating hip injury in a 2012 bicycle accident, underwent surgery and earlier this year relinquished his chief executive role to private equity head Karl Schade. Since then, the firm has undergone several executive changes:

  • Mark Palmer, who was brought in with much fanfare from Cetera to head Presidio’s ambitious national growth plans just two years ago, was dismissed in the fall, as was investment banking head James Student.
  • Mike Tierney, a well-known Bay Area advisor with a substantial book of business, parted ways with Presidio in September and decamped to a rival firm just blocks away in the financial district.
  • Meanwhile, veteran BlackRock executive Celine Colgan was recruited to join Presidio as chief business officer, and two new advisors were added this month to drum up business among the Bay Area’s growing technology elite.


The changes have put the brakes on Presidio’s expansion plans, which only two years ago was targeting a national footprint. Presidio opened a Chicago office headed by Northern Trust veteran Tom Smith in June 2012, but closed it just six months later. “The timing was unfortunate,” Cobb says. “To start a de novo office in a major market, you really have to go there every other week for two years to recruit [clients]. That would have been my job, and after my injury I just couldn’t do it.”

Presidio is still eyeing a move to New York City or Boston, most likely by acquisition rather than building out, but not for at least “several years,” according to Cobb.

Presidio's assets under management also appear to have taken a hit. The firm had just under $4 billion in AUM two years ago, but a Form ADV filed in March shows $3.5 billion in assets. Some industry observers suspect the amount may be even lower after this year’s advisor defections, although Cobb says the firm's AUM is approaching the higher level again.

“The issue is who controls the clients’ assets,” says a wealth manager familiar with Presidio’s business. “How many clients stay with a firm because of their research, and how many stay because of the advisor? Big Wall Street firms can keep clients because they have great research. Presidio has good research, but is more reliant on their advisors.”


Tierney’s departure was disappointing, Cobb admits. “I think the world of him personally, and think very highly of him professionally as well,” Cobb says. But philosophical differences led to a split, according to Cobb.

Tierney, who was a Presidio advisor for over six years, “fancied himself as an investor,” Cobb says. However, that approach was “not necessarily in line with what our investment group was doing. It just doesn’t work in our firm.”

In what Cobb describes as a “very amicable” divorce, Tierney took the clients he solicited, who accounted for about $150 million to $200 million in assets, Cobb estimates, while Presidio kept the clients that the firm referred to Tierney.

Tierney, who now works for Robertson Stephens Asset Management, the highly funded startup launched by veteran Wall Street executive Joe Piazza, did not respond to a request for comment.

Such departures can leave wealth management firms exposed, says industry consultant Jamie McLaughlin.

“Firms that cobble together advisors are more like separate franchises,” McLaughlin says. “The client experience is dependent on the advisor. They’ll always be vulnerable. While such firms can be great cash flow generators, their enterprise values suffer because the revenue is less predictable and consequently less sustainable.”

To be fair, Presidio also has a strong reputation for its private equity and investment banking businesses. And advisors with large books of business are the lifeblood of any wealth management firm.

What’s more, Presidio’s top three advisors -- managing directors Colin Carter, who is based in the firm’s Dallas office, and Bruce Brugler and Jeff Zlot, who work in the Bay Area -- are considered among the best in the industry.

“Believe me, any wealth management firm in the country would kill to have one of those guys,” says Jeff Spears, a former Presidio managing director who is co-founder and chief executive of Sanctuary Wealth Services, a San Francisco-based outsourcing provider for independent RIAs.


Indeed, although many outsiders see dark clouds over the firm, Cobb insists the turbulent year brought unexpected “silver linings.”

“I watched a number of people at the firm step up,” Cobb says. “I realized I don’t have to do all the work. I found out that I’m better at laying the track than making the trains run on time.”

In fact, Cobb says Schade’s day-to-day handling of the firm was so impressive that he plans to name Schade permanent CEO next year, when he slides over to become executive chairman, working on special projects and cultivating new clients.

Cobb says it was Schade’s call to “eliminate two senior positions” -- Palmer’s job overseeing wealth management and Student’s investment banking oversight.

“He felt like we needed a flatter organizational structure that removed all silos,” Cobb says. “It can’t be ‘my team’ but has to be ‘our team.’ I think it’s a very West Coast philosophy, and I subscribe to it.”


Nor is Presidio standing pat.

The firm is continuing to develop its outsourced investment services to foundations and endowments, under the direction of former University of Chicago vice president and chief investment officer Peter Stein.

Ex-BlackRock managing director Colgan is expected to jumpstart Presidio’s business development efforts. And Cobb says former J.P. Morgan advisor Jocelyn Doe and Bay Area entrepreneur (and former client) Erik Christoffersen have just been brought on as advisors to boost the firm’s presence in Silicon Valley and the tech community.

Presidio is targeting entrepreneurs with at least $10 million in investable assets, “although our sweet spot is in the mid-20s,” Cobb says.

As for Presidio’s future prospects? “As long as Brugler, Carter and Zlot are there, their prospects look great,” says Spears.

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