Evermay Wealth Management adds another ex-banker to its RIA
John Edwards was looking for a place that utilizes alternative investments
5 min read- Evermay Wealth Management hired a former banker for talent, not just assets under management.
- RIAs increasingly target bank breakaways, valuing cultural fit over immediate AUM gains.
- Bank-trained advisors may adapt more easily to RIAs than wirehouse breakaways.
- Alternative investments are a key draw for advisors leaving traditional banking roles.
Brooke’s Note: Much is written about the breakaway movement from wirehouses. There is a more subdued but important parallel breakaway movement from banks. On Thursday I plan to have a more in-depth article about two big RIAs that are targeting big-time private bankers at large institutions. This story of John Edwards captured some of the nuance of a what happens when a former banker joins an RIA.
Evermay Wealth Management nabbed a breakaway banker for his brain, the partners say, and not just his assets.
The Washington D.C.-based RIA hired John Edwards away from Chevy Chase Trust of Bethesda, where he helped manage about $1 billion in assets as a senior portfolio manager.
Though this may appear to be an opportunistic asset grab, William Pitt, principal and managing director of Evermay, which manages about $300 million of assets, decided that any assets that follow the 49 year-old investments veteran are gravy in the transaction.
“Given his tenure, there may be clients that follow,” he says. “We hired him more for his talent and seasoning than for his book of business.”
Though many RIAs seek to grow fast by adding brokers from wirehouses, many of whom are free under the Broker Protocol to recruit their clients to come along, there is a risk to pursuing financial advisors just because of the size of their books of business, Pitt says.
The advantages of snagging a book of business can be short-lived: “It doesn’t last long,” he says.
After a quick climb to $3.5 billion of AUM, Evercore solidifies service by drawing water -- again -- from US Trust talent well
Amalgamation of brokers
Pitt adds: “If we were just using headhunters to find advisors, Evermay would be an amalgamation of brokers. We’re trying to build a special firm.”
The principals of Evermay have a grounding in wealth management and they are seeking to use the discipline of a bank but to take it to the next level with more open architecture. The company invests in alternative investments such as hedge funds and private equity. Evermay uses Schwab Advisor Services as its custodian.
Advisors schooled in the culture of a bank may be an easier fit in a firm such as Evermay.
The RIA is not alone in figuring that its odds of retraining breakaways from wirehouses as wealth managers at an RIA are slim.
Chatham, N.J.-based RegentAtlantic hired a second business development specialist in December after considering the possibility of recruiting breakaway brokers from wirehouses.
Story Timeline
Tough cultural fit
“That’s a tough cultural fit,” said the company’s CEO, Christopher Cordaro in an earlier interview. “We’ve explored that but decided to pass.” RegentAtlantic manages more than $1.7 billion. See: How one RIA plans to capitalize on 2010 growth opportunities
Edwards doesn’t have the mentality of a wirehouse breakaway either. Many advisors are looking for a way to monetize their book of business for succession planning purposes or to get a bigger payout.
Helena Jonassen bids farewell to US Trust after 18 years to rejoin breakaway colleagues at Evercore
“Obviously, it’s a benefit if my clients follow me,” he says. “The appeal on the investment side is different products: alternative investments like hedge funds and private equity.”
Edwards managed assets of high net worth individuals and foundations for First Virginia Bank from 1996 to 2002. He joined Chevy Chase Trust in 2003. Edwards says that he could never truly serve clients the way he wanted to at Chevy Chase Trust, which was a subsidiary of Chevy Chase Bank.
Stand-alone unit
Capital One acquired the bank in February of 2009, leaving Chevy Chase Trust as a stand-alone unit.
Chevy Chase Trust was founded in 1999 after spinning off from ASB Capital Management LLC, another investment company previously owned by Chevy Chase Bank. The B.F. Saul family still owns ASB Capital Management and Chevy Chase Trust and Peter Welber is CEO of both businesses.
Chevy Chase Trust was never woven into the Chevy Chase Bank fabric but it provided a minor source of referrals, according to what Welber told the Washington Business Journal last April. “We got over 80% of our new business from independent sources,” he says.
Welber did not return a phone call placed for this article.
Chevy Chase Trust had about 50 employees, $2.4 billion in assets under management and $13 billion in total assets as of this time last year, according to that Washington Business Journal article.
Banking DNA
Banking is certainly in the DNA of Evermay. William Pitt and Damon White left United Bank in Washington to form Evermay earlier this year. The United Bank advisors merged with Ayrshire, founded by Beth Larson and Jim Ferguson, which has been an investment manager in Washington for more than 20 years.
Pitt was an executive vice president and managing director of United Bank, and White was a senior vice president at the bank’s brokerage services division. Before his time at United Bank, Pitt spent seven years at UBS.
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