Financial Advisor – $1B Team Exits Merrill for Independent “Freedom”

Advisor Steven Wagner left Merrill Lynch on Friday to start Omnia Family Wealth in Aventura, Fla. Joining him at the independent RIA are his son, Michael Wagner, and another ex-Merrill advisor, Ivan Hernandez. Their team, which managed $1.4 billion at the wirehouse, has hired Dynasty Financial Partners to provide front-, middle- and back-office services.

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Q: What was the main reason you left Merrill?

A: After 27 years working for wirehouses — I was at Merrill for a little over six years and before that at UBS for 17 years — I just felt like an independent practice was the best way to offer a higher level of conflict-free advice.

Q: How so?

A: Our client base is made up of families with $10 million or more in net worth. So they want service along the lines of a multi-family office where clients feel like they’re getting highly personalized service. The types of clients we serve are looking for advisors who will work in their best interests at all times. We wanted to bring them more flexibility to choose the best products and services, by having greater freedom to cut our own deals with best-of-breed outside providers and subject-matter experts.

Q: Where do you see that paying off for clients in the future?

A: The revolution in new technologies available to independents is going to be a huge difference maker for our clients. For example, we’ve decided to use Addepar, a next-generation reporting-software system. It’s just light-years ahead of what we had at the wirehouses. It aggregates all of a client’s net assets, regardless of where they’re held — from artwork and real estate to stocks and outside business interests. So if a family has a trust account or is involved in several limited partnerships, this software can go across different legal structures to extract information most pertinent at any given time. It just gives us much greater flexibility to present different types of information in different ways to clients on a more individualized basis.

Q: Are you now moving into an open-architecture approach?

A: Yes, Dynasty’s platform has given us the ability to offer a completely open-architecture view of the planning universe. That’s something our clients really told us they wanted to see — they want to know that the investment products you’re using are the best, not just what a firm has available at any given time.

Q: What is the biggest advantage you see to being able to cut your own deals with providers?

A: Probably the biggest avenue it opens for us is to build deeper relationships across several different generations within the same family. We’re now able to put together complete holistic financial plans for people, that span decades — each family member can have access to his or her own set of investment products and solutions. We now have more flexibility to take a multi-generational approach to providing comprehensive financial advice. We’re better able as an independent to go anywhere and look everywhere to find the right set of outside expertise and resources for each family member.

Q: Will breaking away help to lower your clients’ fees?

A: In some cases, we expect our families to wind up paying less in overall fees. In others, they will wind up paying about the same amount in fees — but receive a significantly higher level of service. On the whole, we’ve set up our new practice in a way to provide greater overall value to our clients. That’s through a greater range of outside resources that should bring in more competitive pricing on all levels.

Q: How will going independent affect your own compensation?

A: Of course, owning our own business provides new opportunities to generate higher profit margins over time. Still, it costs money to open an independent practice. And besides our initial start-up costs, we’ve decided it’s important to reinvest significantly in new products, services and technologies on an ongoing basis. So we realize that in order to keep growing, it’s going to take a real commitment on our part to make sure to give our clients everything they need — both now and well into the future.

Q: How is that different from running a practice at Merrill or UBS?

A: In a wirehouse environment, a big part of our payout went to service the growth of all business segments. That makes sense for a large banking institution — but we feel like, as an independent, we can now tailor our operations around what’s most important to the families we serve. In the end, that’s going to help us to be more responsive to each client. We think it’s also going to provide our practice with a quicker path to growth over time.