Just as Cantor Fitzgerald Wealth Partners, the two-year-old wealth management venture of Cantor Fitzgerald & Co., has been looking to regroup after a slow recruiting year and the departure of two top executives, a third senior executive has left.
Last week, the firm's head of sales, Scott Hotham, who was hired in June 2014 to help grow the business and win over top advisers, resigned. His departure followed that of founder and co-chief executive officer, Stan Gregor, who left in April as the firm reorganized its executive roster, and Loren Morris, head of adviser services, who joined MarketCounsel, a consulting firm for registered investment advisers, in May.
Mr. Hotham's resignation has renewed concerns that Cantor is struggling internally with how to grow its wealth management unit, according to Mindy Diamond, president and CEO of Diamond Consultants, an industry recruiting firm that has worked with Cantor.
“I'm not surprised,” Ms. Diamond said. “That's nothing to do with him. There's been a question all along about how committed the parent company is to the wealth management venture.”
Mr. Hotham confirmed that he had resigned, but declined additional comment. A spokeswoman for Cantor, Sheryl Lee, declined to comment.
ATTRACTING ADVISERS
Mr. Hotham was hired in 2014 from Bank of America Merrill Lynch and was responsible for helping build out the firm's platform and attract top advisers, according to
a press release at the time. At Cantor, he reported directly to Mr. Gregor, whose role was taken over by Sean P. Matthews, the chief executive officer of Cantor Fitzgerald & Co., who had been co-CEO of the wealth unit.
He said in that statement that Cantor “is the future of the wealth management business.”
Industry observers have said Cantor has a lot of potential given its storied Wall Street name and reputation, but growth has been unexpectedly slow. Cantor Wealth executives said their goal is to bring on 300 advisers in the next five years. But in over a year, the firm has added just two groups, including a $120 million team in Yardley, Pa., in July 2014 and a $1 billion team from Morgan Stanley Wealth Management's credit union group in Lansing, Mich., in April.
Since its May 2013 launch, the firm has brought on about half dozen teams. According to the firm's most recent ADV filing from March, its RIA managed $698 million on a discretionary basis. The firm has around $3 billion in assets under advisement, according to the ADV.
“On paper the story was really good, and the Cantor name was great, and it's fresh, and they have a lot of money and were committed to it,” Ms. Diamond said. “We had a lot of advisers who were very interested.”
'ONEROUS' EMPLOYMENT CONTRACTS
But in private conversations, industry observers say that part of the issue is that the parent company is very strict about hiring and that compliance errs too often on the side of not taking even some promising prospects because of the risk to the brand and entity.
Ms. Diamond said that the firm had an “onerous” employment contract that had complicated hiring for a couple prospects who ultimately turned down the deal. The real concern, she said, was that prospects did not get a sense of identity from the firm around who they wanted to hire and what kind of firm they wanted to be.
“They keep changing their jersey,” she said. “First it was looking to recruit wirehouse advisers and then make it a transformative deal and acquire top RIAs and then a mix. Meanwhile they have done none of that and had had a lot of shuffling. Their actions are very different than their words.”
“People sense in two seconds that they don't know where they want to be when they grow up,” Ms. Diamond said.
In an April interview, Mr. Mathews said that the firm was totally committed to wealth management and said he took it as his “personal challenge” to grow the unit following Mr. Gregor's departure.
He acknowledged, however, that Cantor had been
“casting too wide of a net” and needed to refocus its recruiting efforts. As part of that, it had identified around 600 registered investment advisers it wanted to target.
