Boutique wealth firm adds affiliates in Scottsdale, Ariz., and greater D.C.. US Fiduciary is staying true to its word. The Houston-based firm came out of the gate two years ago with the bold objective of making a national name for itself by providing boutique wealth-management support to high-end advisors. Since then it has attracted nine high-net-worth advisory affiliates -- two of them in the past week alone.

For the most part, US Fiduciary has grown not by acquiring registered investment advisories (RIAs), but by persuading "captive" advisors -- mainly wirehouse brokers -- to affiliate themselves with the firm. For a cut of the take, US Fiduciary provides comprehensive front-, middle-, back-office support, including the ability, as a broker-dealer and an RIA in its own right, to facilitate fee- and commission-based business equally.

Two more

"We are very much on plan," says US Fiduciary's president Elliot Weissbluth, referring to the recent addition of affiliates in Scottsdale, Ariz., and Leesburg, Va. "And as we continue to gain in market share, we expect that more people are going to check us out."

Last week ex-Merrill Lynch broker Arthur Doglione established a US Fiduciary office in Scottsdale; Houston aside, the firm's first foray west of the Mississippi. He works with former ING fund director Howard Kornblue, the affiliate's senior portfolio manager.

The bulk of Doglione's client base -- amounting to a book of about $300 million when he was at Merrill -- is made of multi-generational families whose main goal in wealth management goes is to preserve family wealth and see it transferred to the next generation as smoothly as possible. "We operate very much like a private family office," says Doglione.

Yesterday John Wolff, formerly of HSBC-owned Wealth & Tax Advisory Services (WTAS), cut the ribbon at US Fiduciary's new office in Leesburg. He works with ex-WTAS colleague Brian Ullsperger and former Merrill broker Melissa Okrasinski.

Catering exclusively to private clients, Wolff's practice at WTAS had assets under advisory "north of $1 billion," says Wolff. Most of his clients are business owners and professionals in Washington and in adjacent communities in Virginia and Maryland.

Traction

US Fiduciary started out with two advisory offices through the pre-launch acquisitions of Houston-based Post Oak Capital Advisors and Chicago's West Hills Asset Management. In July 2005 Philadelphia-based former Smith Barney broker Mary Ann Lambert founded US Fiduciary's first Northeastern office. In November last year Curtis Lyman Jr., formerly a top advisor with Lehman Brothers, established a US Fiduciary affiliate in Palm Beach Gardens, Fla.

In March of this year hedge-fund specialist David Zale set up a New York-based private-client advisory supported by US Fiduciary. Little more than a week later former Morgan Stanley broker Jay Batcha established an affiliate in Traverse, Mich. Three months ago former UBS broker George Wislar opened a US Fiduciary office in Princeton, N.J.

In addition to these affiliates, advisors with Chicago-based New Century Bank, Palo Alto, Calif.-based Addison Avenue Financial Partners and Chicago-based brokersXpress use US Fiduciary's third-party investment platform.

US Fiduciary's business-development head Jim Lynch says the firm is getting traction because high-wealth individuals -- especially innately skeptical baby boomers -- want financial advice that's unfettered by in-house product, and are increasingly aware that they're unlikely to find it at big-name financial institutions.

In turn many advisors, whether brokerage- or RIA-based, want to meet these expectations by providing wealth-management services in an open-architecture environment that provides access to a broad array of rigorously vetted investment styles and vehicles and sufficient administrative support to be able to concentrate on their clients rather than constantly fiddling with practice-management issues.

Free hands

In short, the typical breakaway broker wants the support he got as a captive rep along with the freedom to run his business in a way that best suits his clients' needs and interests.

Doglione started shopping around for a new affiliation about two years ago. But as he examined a number of alternatives, including several respected Wall Street firms, he realized that affiliating with those companies wouldn't give him "the critical ability to tell my clients that their interests are the only ones I'm serving."

Wolff, a broker with Prudential prior to joining HSBC's Wealth & Tax Advisory Services in 2003, agrees. "We've found that no large bank or brokerage can truly provide unbiased advice [that is] provided with the clients best interests in mind," he says.

Doglione illustrates a related dilemma. "At a brokerage where they've bundled ancillary services what you see as an advisor is that it's just an OK offering," he says. "So, for example, if you're working with a client who wants a jumbo mortgage, you might end up having to tell him he can do better by getting one locally -- but that he has to go and get it himself. Your hands are tied."

Affiliating his business with a powerful and evocative brand was also important to Doglione. But, having given several of the big brands a good hard look, he says that US Fiduciary's overall service offering won out over his concerns about the newness of its name. "As a brand it's a neutral that I feel I can help turn into a positive."

Focus factor

Wolff agrees that US Fiduciary is a little-known brand. But, he adds, for a comparatively obscure handle, it has a decidedly familiar ring.

In any case, says Ullsperger, the essential message he and Wolff hoped to convey -- that their new practice is geared entirely to supporting their clients best interests -- is built into the US Fiduciary name. That, he adds, is an important consideration given "Merrill rule" exemptions around brokerage-based investment consulting and other innovations that tend to obscure potential conflicts.

Coming straight out of a brokerage-based wealth practice, Doglione says US Fiduciary's ability to support his commission business was another important capability in its favor. "It's a matter of being in a position to support our clients with traditional brokerage when that's what's called for," he says.

Wolff says his immediate past with a pure-play RIA within WTAS, a tax firm, makes US Fiduciary's support of commission-based business less crucial to Wolff's endeavors -- but he still views it as advantageous. "Going from a brokerage where I was for most of my career to an RIA a few years ago was a difficult transition for me and my clients," he says. "US Fiduciary's ability to support a transition business allows me to go and maybe bring back clients I left [behind]."

Bottom line, says Ullsperger, working with US Fiduciary gives him and Wolff a chance to do what they do best. "We could have gone out on our own and purchased the technology and done the compliance, but we really wanted to focus on serving our clients as efficiently and effectively as possible." -FWR

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