Advisors teams at Morgan Stanley and at Merrill in southern Alabama have left to start their own firm with the fast-rising independent broker-dealer Arkadios.
Arkadios, an Atlanta-based firm with $14 billion in assets under advisement, has picked up advisors from Morgan Stanley's The Wiregrass Group and Merrill's Thornell Group, both out of Dothan, Alabama. Six advisors from those teams have joined Arkadios to found Longleaf Capital Group, which serves roughly 1,000 wealthy households and is working to move roughly $2 billion in client assets.
The two Longleaf founders hailing from Merrill's Thornell Group — senior financial advisors Todd Thornell and Cory Singletary — had constituted only part of that firm's presence in Dothan. The duo had roughly $600 million under management.
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Meanwhile, the four Longleaf founders from Morgan Stanley comprised the entirety of that firm's Wiregrass Group. They are the brothers Charles "Tom" Lee, formerly a senior vice president and wealth advisor; and Jonathan Lee, formerly a first vice president and senior portfolio manager; as well as George Liddon, formerly a senior vice president and wealth advisor; and Lee Forehand, formerly a corporate retirement director.
Joining them is one additional advisor and five support staff members. Morgan Stanley did not respond to a query about the moves and Merrill declined to comment.
Not running away from wirehouses
Jonathan Lee said the teams left the two wirehouses last week. He said Longleaf's origins go back to business connections made at Merrill, where he, Tom Lee and Liddon worked for years before leaving for Morgan Stanley in 2010.
"Ultimately, you know, we wanted to create something where we can leave a legacy, something we can grow and leave to the next generation," Jonathan Lee said.
Many advisors looking toward eventual retirement struggle to find smooth ways to hand their businesses down intact to a new group of owners. Relatively few firms, though, have responded by developing their services to
But beyond that, Jonathan Lee said he and his fellow founders decided to go with Arkadios after consulting other wealth managers who had gone independent and trying to learn from their experiences.
"We have friends in the industry at different firms and the name Arkadios kept coming up," he said. "And we knew some people that were already with Arkadios. And as we were going through our due diligence process, their name kept coming to the top."
Choosing not to start an RIA
Lee said they had given some consideration
Lee said another point was Arkadios' broad service offerings, which rival those of the wirehouses the Longleaf founders are leaving behind. Among other things, Lee said his and his fellow founders' clients want to maintain their ability to put money into private equity and other alternative investments.
"One of the first questions we asked was: Are we going to be able to do whatever it is to make sure we can still service the clients the way we have been doing?" Lee said. "And there's really nothing that we can't do now that we could do before."
The benefits of not having a private equity owner
David Millican, the founder and CEO of Arkadios, said the teams brought over from Morgan Stanley and Merrill are good examples of the type of advisors he's trying to build his firm with. He said Arkadios is less interested in having a large headcount than in attracting select wealth managers who specialize in working with high net worth clients.
"We're looking for a more quality advisor, and we're doing less on the quantity," Millican said. "We look at offices, not necessarily at how many advisors we have on our platform."
Millican thinks Arkadios's independence from any sort of private equity owners or investors is also a big part of its appeal. Many of the firms now driving mergers and acquisitions in the wealth management industry obtain capital for their deals from private equity backers. Millican instead shares the ownership of Arkadios with members of some of its largest partner firms.
One of the big knocks on private equity owners is that they often try to recoup their investments by selling their acquisitions within a certain number of years. Millican said firms that join Arkadios enjoy more stability.
"They know that the folks they are talking to today will be here 10 years from now, and that means a lot to them," Millican said.
The ideal Arkadios advisor: $1 million or more in annual production
Arkadios was founded in 2016 by a group of advisors who had previously run a hybrid RIA formerly affiliated with Triad Advisors, a brokerage that had been until recently operating under a separate brand under the large independent broker-dealer Osaic (formerly Advisor Group). Arkadios has grown in part by drawing
Arkadios regularly appears on Financial Planning's annual
Millican said he expects to move more big advisory teams over in the third and fourth quarters of this year. Once again, though, he said the emphasis is on finding quality advisors rather than simply boosting headcount.
"There's not a number that I'm trying to get to from an advisor or an office standpoint," he said. "It's just as long as they hit that formula where they're essentially doing $1 million or more production at a minimum and have $100 million in assets per advisor, that's who we bring on the platform to meet our criteria."
