NewEdge has a 1099, W-2 and RIA channel and wants to take down wirehouses -- so it hired a 17-year Morgan Stanley executive who just spent seven years at the Mark Zuckerberg RIA
The $80-billion all-channel RIA is showing it technology seriousness by making a wirehouse operations exec its CEO.
5 min read
Brooke's Note: Maybe the wirehouse-lite (light on conflict) model's time has finally come. At different times, different firms have taken a whack at it, not least CONCERT Wealth Management, which nabbed 12 wirehouse teams in 12 months of 2011-2012. FiNet had its moment of high hopes from its varied, one-brand, multi-model, profit formulation. More recently LPL Financial is making headway indifferent to channels - including W-2. Now here we go with NewEdge, which ties its models together by calling them “independence-focused.” But maybe nobody ever had the right leadership? Here comes the ironically named, James Jesse, ready to poach wirehouses blind of their assets – with nobody less than Bob McCann running shotgun as chairman with many a canny character in the founding management. They got New Edge to about $80 billion of AUA in five years. Clearly the sights are now being raised. And they understand how to keep rich clients and rich brokers happy.
NewEdge Capital Group just hired its first outside CEO to execute its plan to beat Morgan Stanley, UBS and Merrill Lynch at their own game – not least by using defectors who get what makes RIAs, 1099s and W-2 advisors tick.
The five-year-old Pittsburgh RIA nabbed James Jesse, who spent 17 years at Morgan Stanley and seven of the previous eight years in executive roles at ICONIQ Capital, an RIA with about $72 billion of discretionary assets under management, according to its most recent SEC ADV.
He spent the last year sitting out, perhaps waiting for his non-compete to expire. No reason was ever offered why he split ways with Iconiq.
Otherwise, Jesse is a near lifer at Morgan Stanley, the largest of the RIAs, where he was mostly in charge of operations.
“James brings a unique combination of institutional expertise from Morgan Stanley and ICONIQ Capital, along with an entrepreneurial mindset that complements our vision for NewEdge," states NewEdge Co-Founder and Managing Partner Rob Sechan, an ex-UBS executive.
"Having him as a partner on our leadership team strengthens our ability to serve clients at the highest level across both public and private markets.”
Pushing forward
CONCERT Wealth Management nabbed 12 wirehouse teams in the last 12 months and this wirehouse-lite is just getting started
NewEdge, which has about $80 billion in assets as of Oct. 31, has always stated that it wil fulfill its ambitious goals by outcompeting the field with technology.
“New Edge was founded by [and currently run by] folks that leaned into scale, service and technology.” says Doug Fritz, CEO of F2 Strategy, which sells outsourced technology, by email.
“They have a great tech head (Michael Bauer) and executives like Alex Goss that see tech spend as highly aligned to value, service and scale. ”
He adds: “I hope James is able to continue pushing their journey forward and values they work they've done to get there.”
Definitive platform
Story Timeline
That ability to outcompete on infrastructure is just what NewEdge saw in Jesse, according to co-chairman Robert McCann, former wirehouse brokerage chief at both Merrill Lynch and UBS. See: Bob McCann will bring swagger, cash and cachet as co-chair of NewEdge Capital Group, a firm that cobbled $30 billion of AUA to compete with old rival Greg Fleming at Rockefeller Capital Management
“What stands out about James is his track record of creating sophisticated investment infrastructure while keeping advisors and clients at the center.
That balance is critical as NewEdge becomes the definitive platform for elite advisors," McCann says.
Lightyear buys Allworth Financial at a white-hot valuation, despite short track record, after Scott Hanson cracks a marketing and comp code
New Edge stands out among RIA aggregators for growing 1099, W-2 employment, and independent RIA channels.
The conpany declined to provide an executive for comment, but its PR counsel said the firm is making a hire at a “pivotal” moment. Asked to explain, the company did not respond.
Beating wirehouses
But Louis Diamond, president of Diamond Consultants in New York said in an earlier RIABiz article that NewEdge is “building one cohesive firm for successful wirehouse advisors looking for a mix of stock and cash but don't want to build something on their own.”
Being “definitive” means beating wirehouses, says Co-Chairman and NewEdge Founder Chuck Warden.
"When we founded NewEdge, our goal was to create an independence-focused platform that could compete with the wirehouses on investment capabilities, while giving advisors true ownership,” he stated in a release.
NewEdge got a running start from its holding company, EdgeCo Holdings, which has been around for 40 years providing technology to the industry. It's backed by Parthenon Group., former owner of Allworth Financial. See: Lightyear buys Allworth Financial at a white-hot valuation, despite short track record, after Scott Hanson cracks a marketing and comp code
Silicon Valley Cachet
Wirehouses still may have an edge because of their connections through their investment banks, private equity, and the like, to bring alternative investments to the ultra-affluent. It's something Jesse oversaw both at Iconiq and at Morgan Stanley
ICONIQ is the ultimate ultra-high-net-worth RIA. It has cliets from Silicon Valley like Facebook/Meta founder Mark Zuckerberg, ex Meta COO Sheryl Sandberg, Apple executive Eddy Cue, OpenAI CFO Sarah Friar and Hollywood talent like Tom Hanks and Justin Timberlake.
ICONIQ's in-house venture capital arm backs companies like Airbnb, Alibaba, Epic Games, Robinhood, Pontera, Snowflake, and Zoom.
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