A Former Branch Manager on Why BOMs Should Keep Their Books - November 8, 2010

11-08-2010 Late this afternoon, two advisors from UBS’ downtown Houston branch, David Harris and Ann Deaton—principals of Harris Financial Group—resigned from the firm to join their former UBS branch office manager, Patrick Mendenhall, at Houston-based U.S. Capital Advisors (USCA), the wealth management advisory firm he formed in September, according to Rick Peterson, who heads Houston-based recruiting firm Rick Peterson & Associates.

“In its first 90 days in business, Mendenhall's firm has taken roughly $1 billion in client assets from UBS,” Peterson says. A, UBS spokesperson said the firm doesn’t typically comment on the resignation of advisors.

Harris Financial Group manages over $600 million in combined assets and has over $3 million in combined production, Peterson says, and they consult on an additional $800 million in assets. “David Harris is one of the best managed money guys in the business,” he adds. “And, Ann Deaton essentially pioneered managed money at PaineWebber in the 90's.”

The move comes on the heels of another enormous and much publicized coup for Mendenhall just five weeks ago, when USCA recruited another top-notch advisory team from the same branch of UBS. The advisors—Matt West, Doug Hall, Christian Bauman and Scott Selzer, three of whom were UBS’ top three $1 million-plus account closers, joined USCA on October 8.

That team previously oversaw $450 million in client assets and generated $4.5 million in annual fees and commissions at UBS, according to Peterson. With a strong focus on retirement planning for executives and employees in the energy industry, they have an average account size of $2 million.

"[These reps] are among the very best at what they do," Mendenhall said.
He should know.

A 30 year industry veteran, Mendenhall was among the best at what he did—spending 15 years managing one of largest and most successful branch offices at UBS and its predecessor firms—and throughout the nation. He began his career as an advisor for PaineWebber in Houston. By 1994, he was given his own branch, with $6 million in production, to manage. He then combined two downtown Houston branches and revenues soared. In 1998, with over $30 million in revenues, Mendenhall’s complex was one of [then] PaineWebber’s top three producers. By 2000, earnings more than doubled to $65 million. “We were always the firm’s top branch in Texas,” he says.

Despite his enviable position and hefty, seven-figure BOM earnings, by 2005, he was ready to move on. In August 2009, Mendenhall did the seemingly unthinkable: He walked away from his very lucrative BOM job at the “top” of his game— technically “retiring”—though he was just 50 and had no plans to slow down.

He began intense research on building his own full-service wealth management firm. “Clearly, there was demand for a platform that didn’t possess the inherent conflicts you find at the large financial supermarkets,” he says. “Advisors and investors were disgusted with how large financial institutions were privatizing their profits and socializing their losses. And clients seemed increasingly reluctant to support the very institutions that brought this country to its fiscal knees.”

Mendehall’s research showed that in order to attract the type of advisor he wanted, he’d need to own a B/D, and also have an advisory side through a RIA. “I wanted to replicate an environment that the advisors already know, not recreate the wheel”.

He also wanted a highly reputable partner that wasn’t a contributor to the financial crisis.Fidelity became his choice through its National Financial Services LLC (NFS) subsidiary. “They provide the exact platform we need, and gave us state-of-the-art technology, reporting, online capabilities, safety, reputation, and flexibility.”

UBS also lost three other top advisors to MSSB over the last few months, according to Peterson. “Including Mendenhall, five of the firm’s BOMs have stepped down in the last year-- mainly in Texas,” he says. “They've been replaced by younger managers whose success remains to be seen.” But UBS also hired three advisors away from MSSB just last month.