Jeffrey Sica spent more than four years plotting his move from Wells Fargo Advisors LLC to independence but stumbled a day before he planned to give notice.
While arranging furniture in the office of Sica Wealth Management LLC that he was about to open, his Wells branch manager walked by and asked what was going on.
“It's hard to hide since we're in the same building,” said Mr. Sica, whose ground-floor location sits nine floors below the Wells Fargo office in Morristown, N.J.
Mr. Sica, who was one of the two top producers in the office of about 32 brokers, immediately resigned that Thursday evening in late May and jump-started an action plan to transfer the roughly $500 million in assets that his team managed.
“We recruited about 30 people to help us meet personally with each client and get their transfer forms signed,” he said of his approximately 600 clients. “My opinion on the market had turned negative, and we had to get the money in to make changes.”
Mr. Sica began his brokerage career in 1994 and has been with Wells Fargo Advisors and predecessor firms, Wachovia Securities and A.G. Edwards & Sons Inc., since 1997. He said he had become increasingly frustrated with the bureaucracy of working in a bank-controlled environment.
“It would take absolutely an eternity to get someone to help you if something went wrong,” he said, contrasting Wells and Wachovia with the close-knit support he received at A.G. Edwards. “The move is the hardest thing I've ever done, but it's clearly the best thing.”
Mr. Sica claims that he has moved all but about 10 clients in the two months since he has left, thanks to stellar support from his custodian, The Charles Schwab Corp., whose customer service rep has been calling on him for years, and to a Wells operations specialist he hired this year from another branch.
Several of Mr. Sica's former colleagues have offered a year of free trading to his clients, he said, but they've resisted because of the outstanding service and communications they've received from his team since the market collapse of 2008 and because they know their portfolios are a “work in progress” that he's monitoring.
While most of his portfolios beat the market in 2008 — with declines of around 18% — few clients enjoyed the full force of the subsequent market rally, because he kept more than half their money in bonds, cash and inverse exchange-traded funds.
A Wells Fargo employee familiar with Mr. Sica's practice denied that his former colleagues offered free trades to his clients and said he is exaggerating the number of accounts he claimed to have transferred in just two months. The Wells veteran, who sought anonymity because he was not authorized to speak for the bank, said Mr. Sica was an extraordinarily hardworking broker who succeeded in taking one of the Morristown branch's strongest young brokers, Thomas Collins III, to his new practice.
Mr. Sica, whose team includes two other advisers and an operations specialist he recruited this year from a nearby Wells branch, said the bank threatened legal action as a result of his Thursday-night maneuvers but never followed up.
“The firm has been very good about not going after him,” the Wells employee said.
The 43-year-old Mr. Sica
is featured in a pumping-iron video about a personal trainer he's been working with since 2000, when he was recovering from a near-fatal infection. But he said the workouts depicted in the video, which include dragging weights across a parking lot, can't compare with the strains of his career move.
“You have to very entrepreneurial and be ready take your lumps,” he said, citing operational startup issues and unexpectedly high amounts of paperwork. “It's been the hardest, but also the best, thing I've ever done.”
He says he's well-prepared for working as a largely fee-based independent adviser because about 90% of his practice at Wells was fee-based. Most of his accounts are small-business owners and their families, who have assets averaging $1 million to $5 million and pay an annual fee of 1.5%.
He's already bulked up his employee count to 17 and increased his assets under management to about $1 billion by absorbing his father's insurance agency and buying some equipment and other assets of Big Blue Trading LLC, which previously occupied his first-floor space. He's also considering hiring some traders from Big Blue, which was run by Todd Christie, the former head of The Goldman Sachs Group Inc.'s New York Stock Exchange floor specialist and the brother of New Jersey Gov. Chris Christie. Mr. Sica described Mr. Christie as a longtime friend and fellow resident of Mendham, N.J.
The shift to more active trading reflects Mr. Sica's view that his clients should diversify into commodities and private-equity investments, particularly in real estate. “The investment world is changing, and I don't see the upside in plain-vanilla unsophisticated stocks and bonds,” he said. “We're also trying to rely on strategies to make our clients money in sideways and declining markets, with inverse ETFs and options.”
That's put him at odds with Schwab, which has become more restrictive about taking custody of alternative investments following intensified post-Madoff regulatory scrutiny. “In the short term that I've been with them, it's become an issue,” Mr. Sica said, noting that he's going to have to liquidate holding in the Frontier Fund and some other managed-futures funds that Schwab has not approved.
In a conference call with analysts last week, Schwab chief executive Walt Bettinger said the firm has lost some business to competitors because of its decision to reduce exposure to alternative assets and has ended relationships with some advisers who did not have adequate "process controls," according to Richard Repetto, an analyst at Sandler O'Neill & Partners LP.
Mr. Sica said he retains a small commission business, primarily annuities and C-class mutual fund shares, through Comprehensive Asset Management and Servicing Inc., a local broker-dealer in Parsippany, N.J.
According to the Financial Industry Regulatory Authority Inc., Mr. Sica since 2001 has paid $260,500 in three customer arbitration claims involving unauthorized trading or failure to follow customer orders and employers in related cases have paid a total of $487,286. Most of the charges were made by one family, according to Mr. Sica's office.
One claim against Mr. Sica has been dismissed and another involving investments in a managed-futures index fund sponsored by the now-defunct Refco is pending.
