How Merrill lost a $1B team
A Merrill Lynch team managing almost $1 billion in client assets opened up an RIA with Dynasty Financial Partners, marking yet another substantial chunk of assets moving away from the wirehouse.
Wyeth Private Wealth, led by CEO Michael Henley, works with high-net-worth individuals and specializes in navigating complex tax strategies. The Chadds Ford, Pennsylvania-based team includes COO Alison Brooks, founding partners Steve Maconi, Mark Jackson and Tracy McGuire, CCO Brittany Kalsky, senior associate Erin Yake and associate David Clark.
Maconi, who has served retirees from nearby conglomerate DuPont in Wilmington, Delaware for more than 35 years, will serve as the firm’s chairman.
At 34 years old, Henley was ranked #1 in the State of Delaware in Forbes’ “America’s Top Next Generation Wealth Advisor” in 2018 and ranked #42 nationwide. Six out of the eight partners are in their 30s. “We have a two or three-decade runway ahead of us,” Henley says. “We can really see ourselves building out the business, and we weren’t looking to build it inside a big bank. We wanted to do it on our own.”
Henley and his team focus on tax modeling that can span five or 10 years into the future, he says, something that the largest institutions shy away from. “The large wirehouses tend to get away from that business — just from a liability standpoint — and steer the client towards their CPA," Henley says. " I found working with accountants all across the practice that they do a great job maximizing annual returns, but there’s not much in the way of tax strategy and figuring out tax models in the long term.”
For his ultrahigh-net-worth clients, required minimum distributions from retirement accounts are “ticking tax time-bombs,” he says. Instead, Wyeth looks toward charitable giving, appreciated stock and donor-advised funds as ways of offsetting tax deductions well before clients hit the mandatory distribution age of 70 ½.
“Very often wealthy families are looking to gift to their children, as well,” he says, adding that parents can gift assets to a child in a lower tax bracket as a way of mitigating the tax burden.
Henley named the firm to reflect the history of the area, he says. Renowned American painter Andrew Wyeth worked from a studio in Chadds Ford.
As for portfolio management, less is more, Henley says. “We tell clients to control the controllable,” he says. “We can’t control who is the White House or what’s the rate of Chinese currency. What we can control are fees, taxes and risk.”
Henley says the move was just another way to become efficient. “Inside the wirehouse, the culture was once there,” Henley says. “But now, teams are managed at the lowest common denominator,” citing bureaucracy and over-documentation. “I truly believe that in the next 10 years, the number of teams going independent is going to go up tenfold.”
The Dynasty network now has more than 45 teams managing more than $28 billion in assets on the platform, according to a company spokeswoman. A separate Merrill Lynch team that oversaw $600 million in client assets left the wirehouse last year to join a Dynasty-affiliated RIA. The firm also picked up Procyon Partners from a growing roster of ex-UBS advisors, which managed $400 million in private wealth assets and $8 billion in institutional assets.
Dynasty’s CEO Shirl Penney says his firm attracts breakaway brokers because his firm followed a similar path. “I was 31 when I started Dynasty,” Penney says, “so I get where Michael is in his life and all the emotions. We understand what it’s like at the wirehouses — we understand the vernacular. But, we speak RIA.”
One of Dynasty’s biggest problems attracting new advisors is inertia, he says. “These advisors have full-time jobs, and on top of that, they have to invest the time to learn this new language and do the due diligence and research and to get educated.”
After the first year, the businesses really begin to flourish, he says.
Few brokers who become RIAs return to wirehouses, Penney says. “You don’t find too many brokers saying, ‘I have made a huge mistake.’ It just doesn’t happen.”