News, Vision & Voice for the Advisory Community
Fusion Family Wealth LLC presumed the economics of buying top research wasn't there -- but was shown otherwise
November 13, 2013 — 7:07 PM UTC by Brooke Southall
Brooke’s Note: Dynasty Financial was quiet, very quiet, for months on end. But now it has started to rack up wins, big, exotic ones, with a vengeance. More impressive is that in each case, the newly minted RIA principals named Dynasty as a key missing piece in emerging from the wirehouse womb. This Blau departure is the second one in a couple of weeks after Hal Lambert’s defection from Credit Suisse. See: Pershing, Dynasty and Envestnet gang-tackle Credit Suisse and jolt loose $1 billion duo. It’s hard to believe these prestigious and flat-out big wins won’t capture the attention of other would-be RIAs.
Fusion Family Wealth LLC has a why-didn’t-I-think-of-that strategy for building its business that had one potential weak underpinning, now seemingly corrected.
The New York City- and Long Island-based RIA that broke away from UBS on Friday expects to have about $900 million of assets under management when the dust settles after re-materializing as a legally fiduciary advisor. See: Merrill Lynch breakaway wins $550-million account in head-to-head battle with UBS — despite a higher bid.
While its founder, Jonathan R. Blau, 46, liked life under UBS and felt he could deliver good advice, he was uneasy about a niggling factor. He was determined to serve as a high-level fiduciary. And though clients never questioned him on that, he was aware that by serving under FINRA’s rule-based suitability standard and UBS’ corporate structure, that technically he was not a fiduciary. See: An in-depth analysis of FINRA’s attempted takeover of RIAs and why the group should be disbanded, Part 2.
“Fusion Family Wealth was formed for a simple reason: We recognized that clients expect a high level of professional care aligned with the highest legal fiduciary standard. As an SEC-registered firm, we are able to fuse these two concepts together,” Blau said in a release.
Accountant category killer
Blau built the business to its current stature by adhering to a script followed by many advisors — seeking out trusted advisors, such as accountants and lawyers, and serving their clients.
But he took it a couple steps further. Blau is an accountant by training himself and he takes on the accounts of CPAs — even if they don’t fit the generally established asset minimums of clients in general. See: In their own words: Five top advisors’ secrets for creating stronger alliances to gain more referrals.
“If they’re giving us that compliment [of referring their own wealthy clients], we’re not going to impose a standard minimum.”
The expectation is that this fusing of form and function will lead to accelerated growth, according to Shirl Penney, president and CEO of Dynasty Financial Partners. Dynasty now has 54 advisors in 27 offices advising $19 billion of assets.
“Over the years, Jonathan has built a substantial network of accounting and legal professionals and has successfully collaborated with a wide center of influence in building his business. Now, more opportunities will present themselves to Fusion Wealth as independent advisors.”
What has held Blau back from breaking away until now, he says, was concern about the ability to achieve critical mass as an RIA to afford the kind of manager research necessary to invest properly. Key manager vetting services assembled by Dynasty come from Callan Associates Inc., Wilshire Associates Inc. and Envestnet.
Callan at reasonable cost
“We never knew there was a way to partner with someone like Dynasty. Having close to $1 billion made us a large team but in terms of research, we wouldn’t be big enough for Callan for research.” See: Attack of the killer app: Dynasty targets the corner-office broker by combining Envestnet and Callan.
Blau says he was pleasantly surprised to learn of Dynasty because of its omnibus relationship with Callan and because he knew Penney’s name from his days at Smith Barney.
Blau chose Fidelity Institutional Wealth Services as the RIA’s custodian based on its brand and technology, he says. He adds that Fidelity and Dynasty exceeded his hopes for hands-on transition assistance — quipping that that was not easy to do because the promises were ample enough.
Blau has worked as a senior advisor at Sanford C. Bernstein & Co. Inc., Morgan Stanley and UBS. Blau holds two post-graduate degrees from Fordham University — an MS in taxation and an MBA in accounting.
He is proud that the rest of his team also has a wealth of experience and education.
Harvey L. Radler began his career at Wertheim & Co./Schroders. He then moved to Prudential Securities Inc., where he became chief executive of Gibraltar Advisors. In 1996, Radler joined Sanford Bernstein. After that, he moved to Morgan Stanley in 2000 and then joined UBS in 2008. In addition, Radler spent 25 years on the disciplinary panel of the NYSE.
Merrill and el Touro
Joel S. Bodner joined Fusion Family Wealth from UBS, where he had worked since 2008. He began his career in investment management at Merrill Lynch in 2002. Bodner received his B.S. from Touro College, majoring in finance with a concentration in computers. He holds an MBA in finance from Baruch College’s Zicklin School of Business in New York.
James F. Cloudman Jr. previously worked as a financial advisor at UBS Financial Services Inc., which he joined in 2010. He has a B.A. from the State University of New York at Binghamton and an MBA in management from Hofstra University.
Mentioned in this article:
Dynasty Financial Partners
Consulting Firm, Specialized Breakaway Service, RIA Set-up Firm
Top Executive: Shirl Penney
Share your thoughts and opinions with the author or other readers.