Zac Ritchey was tired of all the promises he couldn't keep to his ultrawealthy clients at Wells Fargo.
"I commonly said: 'It's coming.' I would say that a lot," Ritchey said in an interview.
"'We're promised that this is going to happen, and there's going to be this technology solution for financial planning,'" he recalled saying. "Or, 'this banking thing that you have is going to be much better'."
On March 10, Ritchey and two other private bankers at Wells Fargo Private Bank announced their team's move to upstart registered investment advisor Private Wealth Asset Management, a Cedar Rapids, Iowa-based firm where they will become fee-only fiduciaries and partners and lead its Omaha office. The group shared the news in an emailed press release.
The story of how Private Wealth, which launched only one and a half years ago in fall 2021, scooped up its biggest team yet, underscores how most wirehouses are failing to keep some of their biggest star advisors from leaving for independence.
The recently departed Wells team worked out of Omaha and had $1.9 billion of client assets under advisement (AUA). The team intends to selectively migrate fewer than half of their former relationships, under 100 clients, a spokesperson for the group confirmed in an email.
The team includes Ritchey, who is a certified financial planner; Ben Goethel, a senior wealth strategist who is a former practicing attorney specializing in trusts, estate planning, and tax; and Tyler Schlumpf, a chartered financial analyst who is a portfolio manager and financial consultant. Only Ritchey and Schlumpf were licensed brokers at Wells, according to BrokerCheck records.
Ritchey becomes a managing director, Goethel remains a senior wealth strategist and Schlumpf becomes a senior portfolio manager in their new roles, according to the press release.
Reached for comment on the move, Wells Fargo did not respond.
A sinking ship or 'subsiding' problems?
The move came only days after Wells lost another high-profile group of private wealth advisors in Charlotte, North Carolina, to independent broker-dealer giant LPL Financial. The new group, Carnegie Private Wealth, managed $1.45 billion of client assets at Wells, making it LPL's biggest recruiting catch to date for its breakaway channel, LPL Strategic Wealth Services.
March 6, 2023 12:29 PM
Wells is trying to shake off years of attrition as it navigates recent scandals across multiple lines of business, including wealth management. Regulators have warned the company that it may have more to answer for.
Although the bank has made efforts to improve its recruiting and retention of advisors — with modest success in the final quarter of last year, when it saw a rare uptick in its net advisor headcount — some industry watchers remain skeptical that its game will improve further.
The firm's recent cuts to field leadership, positions which offer support to advisors and usually help in recruiting, hasn't helped perceptions of its efforts among some experts.
Industry recruiting firm Diamond Consultants pointed out in a recent report on recruiting trends last year that Wells Fargo's slight turnaround late last year in advisor recruiting could be a sign "that the years of negative press may be subsiding." It noted that the firm's "above-market recruitment deals," among other things, were a draw for advisors.
"They're having to pay a premium for advisors to go to Wells Fargo, because most advisors know that they are they are taking a step backwards — in terms of ease of doing business, a firm that's focused on on the advisor as the client, their ability to brand and market themselves and candidly leadership that is making the right decisions for the benefit of the financial advisor and the wealth management clients," Frank LaRosa, the CEO of industry consulting firm Elite Consulting Partners, said in an interview.
LaRosa said the higher payouts in recruiting reflect Wells Fargo's perceived lack of resources relative to competitors.
Last month, Wells Fargo rolled out a major upgrade to its mobile app, introducing a financial planning-focused tool called LifeSync that's intended to improve client experience and help with advisor acquisition and retention. But it was too little, too late for teams like Ritchey's.
March 1, 2023 6:57 PM
'Abandoned' smaller markets at Wells
The Omaha team's planned departure from Wells began around six to nine months ago, Ritchey said.
Other wirehouses and big bank firms dangled lavish upfront sums to lure the team, he said, but to no avail.
"It's a very competitive environment," he said. "I mean, their first LinkedIn message would be, 'Hey, we can pay you this much.' And you're like, 'What the heck? This is crazy.'"
Ben Goethel, a senior wealth strategist at Private Wealth Asset Management.
The team decided to steer clear of big broker-dealers. "What we were afraid of was, we were going to be making a move for an exchange of the same problems," Ritchey said, adding that he and his colleagues instead wanted to know how firms could "provide additional value to our clients."
Not just the client-experience technology at Wells was lacking, he said. So was the overall quality of service for ultrahigh net worth clients with bespoke needs like trusts, business transitions or philanthropy. He watched specialists for those areas get pulled away to bigger metro markets like New York, San Francisco and Minneapolis.
"Definitely coming out of COVID, we saw a lot of changes happening. And really, it's not unique to Wells Fargo. I think you can see it across the nation," he said, referring to big banks with wealth management businesses.
When Ritchey called those bigger urban hubs for support with an ultrahigh net worth client's special needs, he vied with hundreds of advisors, and in turn thousands of clients, for that person's attention.
Turnover in those specialist roles was also high. "We were constantly re-educating those people when we needed help," he said.
The consequence was lost client relationships.
"Many times, we'd have to shield our clients from what was going on. And sometimes you just can't get around issues that were happening," Ritchey said.
It used to be that Wells had four private wealth advisors based out of Omaha, Ritchey said, serving clients who had at least $10 million of investable assets. Then Ritchey became the only one. With his departure, Wells now has none in the area, he said.
As part of many consolidations in recent years, Wells "eliminated most leadership positions on The Private Bank side, which led to Zac and Tyler reporting through Wealth Fargo Advisors" even though they were private bankers," the team's spokesperson said in an email.
"Like our other markets, Omaha has been abandoned by the large institutions," Kim Cappellano, a Private Wealth founding partner and an Omaha exit from Wells herself, said in a statement.
On the other hand, most RIAs didn't seem like the right fit, either, Ritchey said.
Tyler Schlumpf, a senior portfolio manager at Private Wealth Asset Management.
Although he and his two teammates had met while working at RIA Carson Wealth prior to moving to Wells Fargo, they wanted a firm that would deliver an RIA experience while providing the resources of a large private bank.
"Many RIAs will work with any type of client. That's how competitive they are," he laughed.
Ritchey's Omaha team, by contrast, prefers "working with a small group of clients and creating an outsourced family office approach" that gives each client more time and services. Private Wealth fit the bill, Ritchey said.
"I wanted to get back to truly doing what's best for our clients and be able to have the right to go shop and choose which solution, whether that's in banking or investments or philanthropy, or selling their business," he said. Now, "we could have any option to go shop for our clients."
The ex-Wells private banker club
The move also shows the recruiting power of former colleagues, who offer a familiar face as advisors consider new options, and of equity partnership as a retention incentive.
March 9, 2023 5:53 PM
A look at the About page and LinkedIn profiles of Private Wealth shows that at least five of the employees there had also been Omaha-based and recent Wells Fargo departures, often from the same time period that Ritchey and his team worked there in the late 2010's. Some employees did not appear to have a LinkedIn profile, so the number could be higher.
"Private Wealth has grown its total staff from seven to 49, and opened offices in four states and eight markets — Omaha, Nebraska; Cedar Rapids and Des Moines, Iowa; San Antonio, Corpus Christi, Midland, and Fort Worth, Texas; and St. Louis, Missouri," the company said in the press release, indicating its strategy of supporting breakaway private wealth advisors in the midwest.
Asked if his team was influenced in their move by prior acquaintance with the staff of Private Wealth, Ritchey said that was a factor in the decision-making, although not the only reason.
He added that "you look for trust in this industry" and his prior experience with colleagues at Wells before they moved to Private Wealth was reassuring, given their "similar experience" as former private bankers and private wealth advisors who had felt overlooked in "smaller, not-hub markets."
"Definitely there was some overlap, but there's also other team members that I had to vet on my own that I had never met before," he said.
The bigger draw was a fit that seemed more stable for clients and the chance at partnership, he said, which is "very unique" in the industry — where more commonly, advisors who choose independence end up in a franchise model or "a model where you can tag onto something that's already established."
"We are the owners of our clients and our firms," Ritchey said. "We've got an equity portion that we're very excited about."
"It causes you not to want to make another change in the future. So this is our last stop."