Veteran advisor Thomas Barr is the first wirehouse breakaway to join Steward Partners Global Advisory following the rapidly growing firm’s transition to Raymond James’ RIA and custody platform, completed in late May.
Barr will run Barr Wealth Management as a W2 employee with longtime colleague Arline Strelzik serving as client administrative manager and vice president. The team moved into Steward’s New York City office last Thursday; by Friday afternoon, Barr already had reached the majority of his 35 clients who “overwhelmingly” confirmed they would be following him to the new practice, along with more than $200 million in managed assets.
Steward’s equity package, culture and good reputation rendered it the most attractive destination, said Barr. Founded nine years ago with one advisor and around $100 million in assets under management, the firm since has grown to around $25 billion in AUM across more than 350 partners—many out of the same wirehouse channel from which Barr and Steward’s founders emerged.
“I saw that a number of Wells and other refugees from large wirehouses had come to Steward in the last few years,” Barr said. “That was very encouraging to me. I also heard positive things from clients who had relationships with someone there.”
Roughly two-thirds of advisors who join Steward have been referred by existing advisors or, as in Barr’s case, clients of existing advisors, according to founding partner and Head of Business Development Greg Banasz.
“The large majority are referral based,” Banasz said, “and that makes us feel really good.”
Compensation was “certainly an important consideration,” said Barr, but it was by no means his foremost concern in selecting an independent partner. While “not nearly the highest” bidder, Steward offered incentives that he, ultimately, deemed more valuable—in particular, a recruiting package that includes equity granted to every employee from the C-suite to the back office. Meeting growth goals can earn partners additional shares, said Banasz, all of which pay out 70% of profits on an annual basis.
“Who does that?” he asked. “Taking the profits of the organization and distributing them back based on their equity position within the firm is definitely unique.”
“I like the fact that the firm is employee owned, which means everyone is rowing the boat in the same direction,” said Barr. “It gives a sense of camaraderie that you don’t have at the big firms, including Wells. Not that there aren’t some good people, but I was told when I joined the big brokerage firm that it’s every man for himself and there’s a certain element of truth to that. Here, there’s a sense of camaraderie and ownership.”
A $100 million investment last summer by the Pritzker Organization, a Chicago-based merchant banking firm founded by heirs to the Hyatt Hotel fortune, also inspired confidence. As did new resources becoming available following the Raymond James conversion, which Barr believes will elevate Steward’s game to that of the long-established institutions.
“I know that Steward is talking to other firms on Wall Street for research and other services,” he said. “I feel that I’ll have access to everything I had before, and then some.”
Steward announced that it would be changing its prior longstanding relationship with Raymond James Financial Services last year following the acquisition of Oregon-based Umpqua Investments and its broker-dealer unit a year earlier. In what was the first (and, so far, only) large-scale mergers and acquisitions deal for Steward, the move brought brokerage and advisor registrations in-house, allowing the firm to establish multiple custodian relationships and broaden investment opportunities for its advisors.
“We can build our platform to include products that are outside of RJ,” said Steward President Doug Kentfield, head of wealth management. “Or we could have direct selling agreements, which gives our advisors more latitude when selecting investment products and meeting the investment needs of our clients.”
Steward is currently in the process of integrating with BNY Mellon’s Pershing to custody assets, said Kentfield, which should become available to advisors by the first of November. And the firm is set to become the first institutional client of a new custody and clearing division under development at Goldman Sachs.
“Goldman’s building something really special,” Steward founder and CEO Jim Gold told Michael Kitces, author of the Nerd’s Eye View industry blog and founder of XYPlanning, in early August. “Obviously, an amazing brand name and terrific resources. So, we’re really excited about that opportunity.”
Gold told Kitces that Steward eventually intends to establish a relationship with all of the custodial institutions but conceded that it would take some time “to work through the pieces and parts there.”
Banasz said the new Goldman division is expected to launch next year. In the meantime, the expanded offering is already attracting a stream of new partners—both W2 employees and 1099 contractors (both of whom receive the same equity offering). He also expects Steward to pursue additional custody relationships and more traditional M&A going forward.
“We’ve got our management team up and running,” he said. “We’ve got all the technology working, we’re starting to work with other custodians. So, while Raymond James is still definitely our premier partner and the group that we work with most frequently, we have a pipeline filled up for not just this year but leading into next year.”
“It’s opened up the floodgates with recruiting for us,” he said.
After pausing recruitment efforts earlier this year to switch over to the new Raymond James platform, Banasz said efforts are “ramping back up” and that Steward is looking at a “robust” pipeline through the rest of 2022 and into 2023.
“I think we’re on our way to being a billion-dollar revenue organization,” Gold told Kitces. “At our [return on assets], that’s $150 billion in assets. . . . as far as I know from my world, I think only one or two other firms have gotten those kind of numbers to start.”