A $500 million-plus team in Eugene, Ore., has left Morgan Stanley Smith Barney LLC to set up as an independent advisory firm — but not without a legal challenge by MSSB.
A $500 million-plus team in Eugene, Ore., has left Morgan Stanley Smith Barney LLC to set up as an independent advisory firm — but not without a legal challenge by MSSB.
Sapient Private Wealth Management LLC, which launched today, is lead by managing partner Greg Erwin, who formed the firm with two other principals, Alan Rexius and King Martin.
All of the Sapient principals are Smith Barney veterans.
“The option we chose in the end was to be in control of our destiny and create our own firm for our clients,” Mr. Erwin said. “Moving to an existing firm wasn't going to give us the flexibility and autonomy we wanted.”
Mr. Erwin, a 26-year industry veteran, said that after experiencing many firm mergers over the years, he and his team “wanted our own culture … without multiple agendas and bureaucracy.”
MSSB earlier this month obtained a restraining order against the three men, prohibiting them from contacting clients who were not included on a list of customers that Sapient provided MSSB under the recruitment protocol.
The protocol is a voluntary agreement among the major firms that allows departing advisers to take contact information for clients. But advisers must identify those clients when they leave.
Clay Skurdal, the manager of the MSSB office in Eugene, where the brokers worked, said the Sapient advisers had contacted at least 10 clients not on an 11-page list Sapient provided, according to court records.
But in a court filing, Sapient claimed the list was actually a 105-page, double-sided list that Mr. Erwin “carried with him for more than a week in the event of a sudden resignation.”
Mr. Erwin declined to comment on the litigation, but said he expected to transfer over most of the $500 million to $600 million the team managed at MSSB.
Sapient worked with Focus Financial Partners LLC, an outsourcing provider, to set up the firm, which will hold assets in custody at Fidelity Institutional Wealth Services.
Meanwhile today, Fidelity Investments said that in the first nine months of the year, it saw 120 brokers and teams with $8 billion in assets move to the independent channel — a 26% increase in average assets from the same period a year ago.
Of that universe of 120, 45% started their own advisory firms, using Fidelity as a custodian.
The remainder either joined an independent broker-dealer that clears through National Financial Services LLC, Fidelity's clearing arm, or joined an existing RIA on Fidelity's platform.
