Wealth firm Dynasty building an upscale LPL

By Joseph Giannone and Joe Rauch

NEW YORK (BestGrowthStock) – Dynasty Financial Partners said on Monday it hired a $6 billion U.S. Trust wealth management team, a large step in the start-up’s plans to create a network for independent investment advisers catering to the super-rich.

Dynasty is not a “roll-up” firm, out to acquire multiple teams of high-net-worth advisers, such as HighTower Advisors or Focus Financial. Instead, the firm has spent two years building a platform that offers trading, clearing, research and other support services to self-employed wealth advisers.

Think of it as an LPL Financial (LPLA.O: ), only for much larger and more upscale firms.

“There is a hole in the marketplace for a dedicated service provider with a deep understanding of high-end advisers and what they need to grow their business,” Dynasty Chief Executive Shirl Penney told Reuters.

While LPL historically provided broker-support to smaller advisers, Dynasty wants to work with advisers that manage from $250 million to billions of client assets.

Penney said he sees doing business with the top 2 to 3 percent of U.S. wealth advisers, and currently is in talks with about 30 teams as potential clients, managing in aggregate $15 billion of assets.

The recent and highly successful initial public offering of LPL Investment Holdings Corp (LPLA.O: ), Penney said, illustrated why the advisor-support business is attractive.

“LPL has done a fantastic job, and now they have a (price-to-earnings ratio) of 44, compared with Morgan Stanley at 10,” he said. “It tells you investors see continued growth in the independent space.”

Penney helped build a private wealth management business at Citigroup’s (C.N: ) Smith Barney unit, assembling 200 advisers focused on people with at least $50 million to invest.


On Monday, Dynasty announced its launch and said it hired U.S. Trust’s Michael Brown as its wealth management director. Brown’s team, including Charles Britton, managed $5.9 billion in client assets, according to a Barron’s 2009 survey.

By joining Dynasty, Brown becomes one of the largest big-bank advisory teams ever to join an independent firm.

Brown said he made the move for several reasons, including an equity stake in Dynasty, a more client-friendly business model and the chance to work with some big-league names who signed on as investors and directors.

Board members include Former American Express Co (AXP.N: ) Chief Executive Harvey Golub, and William Donaldson, the former CEO of Donaldson Lufkin & Jenrette and a former Securities and Exchange Commission chairman.

Another backer is Todd Thomson, a former Citigroup (C.N: ) chief financial officer and former head of global wealth management.

Dynasty said Brown, a three-decade veteran in the business, also will serve on its board of directors.

Brown’s departure is the latest in a continuing series of defections from U.S. Trust, Bank of America Corp’s (BAC.N: ) private banking unit.

U.S. Trust, one of the nation’s largest private banks, has suffered a wave of adviser departures since Bank of America, a mass-market retail lender, in 2008 bought Merrill Lynch, a brokerage giant that has its own high-net-worth business.

In May, U.S. Trust said it intended to hire 200 new bankers and advisers in 2010 to offset its losses. In October, U.S. Trust President Keith Banks told Reuters that the unit had hired 40 people from major rivals in recent months.

(Reporting by Joe Rauch; editing by Dave Zimmerman and Tim Dobbyn)

Wealth firm Dynasty building an upscale LPL