A former private banking executive who previously led private wealth divisions at UBS, J.P. Morgan and Morgan Stanley has geared up a new turnkey program targeting breakaway ultra-high-net-worth advisors.
Private wealth veteran John Straus has teamed up with Peter Ruhlin to launch a new offering aiming to help high-end advisors build their own hybrid registered investment advisor (RIA) shops.
FallLine Securities will offer broker-dealer services, an integrated suite of technology, a middle office and transition assistance, exclusively targeting advisors serving ultra-high-net-worth clients. The firm doesn’t take an equity stake or make direct investments in the firms it helps launch, but does introduce capital sources when needed.
FallLine joins a growing lineup of firms with an array of different models, aiming to help captive brokerage advisors break away to launch independent shops. Others include firms such as Dynasty Financial Partners, HighTower and Focus Financial.
What makes FallLine Securities unique is its exclusive focus on the ultra-high-net-worth segment, says Straus.
"Heretofore advisors who were contemplating making that switch were forced to rely on partners and providers that would assist them in launching their own firm that were really focused on all kinds of end clients," says Straus. "When you work with really ultra-high-net-worth clients, with $25 million or more in net worth, they require a different set of solutions."
For example, he points to his firm’s ability to deliver complex private placements as a differentiator.
While there are a host of other firms aiming to attract high-end advisors, this offering is unique in that it centers around a specialized, high-end broker-dealer, says Christopher Winn, managing principal with Advisor Assist. At many of the other firms targeting breakaway advisors starting RIAs, the broker-dealer is designed for the masses, or is more of an accommodation, he says.
This could appeal to high-end advisors that have a strong flow of transactional business, or who have highly complex transactional needs, Winn says.
"The multi-billion advisory practices that are spinning out [of private wealth advisor teams] often have more complex client relationships than the average team," Winn says. "It is appealing to the clients of those larger advisors to have access to private investments, lines of credit [and] complex structures."
But FallLine will likely compete with firms like Dynasty, which already has an established track record of attracting high-end breakaways, says Winn. For a startup firm looking to attract breakaways, signing the first few teams can be the biggest challenge, Winn says.
"Folks tend to like to see how the first firm or firms go through this," Winn says. "The first few clients with any model will cause them a little bit more of a challenge."
Building a brand and awareness may be the big challenge for FallLine, says Tim Welsh, president and founder of Nexus Strategy, a strategic consultancy.
"Nobody’s ever heard of them," Welsh says. "If you’re a billion dollar team and you’re going to put your faith and trust in a platform, you’re really going to want to know about them."
Straus is betting that his reputation and connections in the industry, and experience leading ultra-high-net-worth divisions at top wirehouses, has set him up for the task.
"I built three of the most successful ultra-high-net-worth platforms in the industry," Straus says. "We’ve incorporated [that knowledge] into every piece of our model and it’s based on the unique experiences that I’ve had dealing with wealthy clients and supporting advisors who cover wealth clients."
Straus had led UBS Wealth Management Americas’ ultra-high-net-worth division from 2006 until 2010 when UBS shuffled leadership and Straus subsequently left the firm. Before that, Straus had been head of U.S. private wealth management and private banking for J.P. Morgan and head of U.S. private wealth management for Morgan Stanley.
And this isn’t Straus’ first foray into the RIA world. After leaving UBS in 2010, Straus initially landed at Samoset Wealth Management, a roll-up company aiming to buy shares in high-end RIAs, as reported. Straus and Ruhlen later left and formed a consultancy, FallLine Strategic Advisors.
Straus’ background could help FallLine gain traction, Winn says.
"He’s well known in the industry," Winn says. "If you’re seeking to attract a wirehouse advisor, having walked in their shoes in the past, knowing their challenges, always helps."
Straus says the firm is currently in discussions with a number of teams.
"We are in active dialogues with many different groups," Straus says. "We fully expect to be up and running with advisors on our platform within the next couple of months."
Exclusively targeting the ultra-high-net-worth segment has allowed the firm to focus its resources, he says.
"We didn’t have to build things that were unrelated to servicing ultra-high-net-worth clients," Straus says. "We have the bandwidth and the expertise to assist these advisors in doing things they would be really challenged to do on their own."