Todd S. Thomson, Citigroup Inc.'s former head of wealth management, lured a top Bank of America Corp. financial adviser with $5.9 billion in client assets to join a new business that caters to independent advisory firms.
Michael C. Brown, 52, said he left Bank of America's U.S. Trust unit last week to join New York-based Dynasty Financial Partners, founded by Thomson and Shirl Penney, another former Citigroup manager. Brown's clients had a typical net worth of $50 million, according to Barron's, which ranked him 28th on its most recent list of the top 100 U.S. financial advisers.
His departure may revive concern about the ability of brokerages such as Bank of America's Merrill Lynch to keep top producers as the companies grapple with mergers, stagnant stock prices and bad publicity tied to probes of mortgages and securities underwriting. More than 7,300 advisers have left the four largest full-service brokerages from the beginning of 2009 through June, according to Aite Group LLC.
Brown's defection is "another indication of what I would define as the dysfunction of Bank of America and other major firms," said Tim White, a partner at the executive recruitment firm Kaye/Bassman International Corp.
Bank of America, the biggest U.S. lender, took $45 billion from U.S. bailout programs and had to offer retention packages to keep top advisers when it acquired Merrill Lynch & Co. in 2009. Its biggest rivals include Morgan Stanley, Wells Fargo & Co. and UBS AG.
"Every one of those businesses is in some way in a bit of disarray," Thomson, 49, Dynasty's chairman, said in an interview. "It used to be an advantage to have a large brand on your card. I think many today feel it's a disadvantage. If you're a financial adviser, you don't want to spend time talking to clients about what's going on at your firm."
Matt Card, a spokesman for Bank of America, said Sunday that the bank had no immediate comment, and representatives for Morgan Stanley, Wells Fargo and UBS did not return calls placed after regular business hours.
Brown, who will be director of wealth management at Dynasty and an investor, declined in an interview to specify how many Bank of America clients will migrate with him. Typically, advisers take about 70% of their customers when they leave a brokerage, said White of Kaye/Bassman. Charles Britton, a member of Brown's U.S. Trust team, joined him at Dynasty, the firm said Monday.
Dynasty is a potential comeback for Thomson, who was once a candidate to succeed ex-Citigroup Chief Executive Officer Charles O. "Chuck" Prince. Prince dismissed Thomson in January 2007 after infractions that included inappropriate use of company aircraft, three people with knowledge of the decision have said.
Thomson headed Citigroup's brokerage and private bank for two years and was the company's chief financial officer for four years before that. Penney, Dynasty's CEO, worked for Thomson in various roles, including director of business development for global wealth advisory services at Citigroup's Smith Barney, according to Dynasty. He left Citi in 2008.
Dynasty investors include William Donaldson, former chairman of the Securities and Exchange Commission and former CEO of the New York Stock Exchange, and Harvey Golub, the former American Express Co. chief who resigned as chairman of American International Group Inc. this year. Both men are also directors. They confirmed their participation in Dynasty without elaborating.
Penney cited research by Cerulli Associates that independent advisers will reach $5 trillion in client assets; he said Dynasty can capture 1% percent of that, or $50 billion, by 2016. His firm offers a technology and services platform for independent advisers, some of whom, like Brown, left established brokerages.
Penney is in talks with about 30 teams managing more than $15 billion of assets who are independent or considering making the leap, he said.