Greg Fleming's $43 Billion Rockefeller Capital Hired 19 Adviser Teams

www.businessinsider.com July 27, 2020 PREMIUM Greg Fleming’s $43 billion Rockefeller Capital hired 19 adviser teams from top wealth firms in 7 months. Execs lay out where it’s focused next.

• Just two years after launching, the pandemic has put Rockefeller Capital to the test as the firm that’s been aggressively poaching talent from larger rivals has had to set up shop for newcom- ers remotely.

• But Greg Fleming’s firm, which oversees some $43 billion in client assets as of mid-May, has continued on a hiring spree in recent months, adding 19 new teams this year.

• Rockefeller is eyeing a sixth division in Chicago to establish over the next six months to a year, and will hire a division leader for that region, too.

• It’s also setting its sights on four other markets: Northern New Jersey, Walnut Creek, California, Scottsdale, and Houston.

• In interviews with Business Insider, Rockefel- ler executives described how the firm has fared through the volatility, where it’s planning to grow, and how they think about the next generation of financial advisers.

ROCKEFELLER CAPITAL MANAGEMENT y the time Wall Street’s closing bell sounded on March 18, US financial markets were in disarray: Greg Fleming the S&P 500’s plunge had triggered a circuit- breaker that afternoon. The Dow Jones industrial Baverage plunged to a three-year low. There are some parallels between this period and the last, Investors scrambled to make sense of the coronavirus he said March 18 in an interview aired on CNBC, speaking pandemic’s economic impact and the devastation that about the economy broadly: “This uncertainty, and the re- could play out in the coming months, even though no ana- ally palpable fear that starts to build into the system. Are lyst, economist, or executive really had a clue. we going to get on the other side of this, what is it going to Greg Fleming had been there before. Sort of. take to get there, and how long will it last?” During the great financial crisis, he served as the presi- He’s been steering a different ship through this crisis. dent and chief operating officer of Merrill Lynch from 2007 Fleming serves as the chief executive of Rockefeller Capital to 2009. Bank of America bought the massive, ailing bro- Management, the New York-based wealth manager and invest- kerage in September 2008. ment firm that debuted in early 2018 and is owned by Viking Global Investors’ private equity arm, a trust representing the Rockefeller family, and company executives. With the stock market’s extraordinary volatility and the challenges with setting people up for work remotely, the pandemic has put the firm to the test just two years after its launch. But Rockefeller has continued on a hiring spree in recent months. Through mid-July, Rockefeller’s private wealth arm — one of the firm’s four business lines, alongside family office services, asset management, and strategic advisory — has taken on 19 new financial adviser teams in 2020, and now counts 34 teams with 67 advisers overall. Through May, Rockefeller had 493 employees. The firm now oversees some $43 billion in client assets through mid-May, which includes net assets under management and advised assets. In recent interviews with Business Insider, Rockefeller executives described how the firm has fared through the volatility, where it’s planning to grow, and how they think about the next generation of financial advisers. In growth mode

Rockefeller is maintaining earlier plans to grow its financial adviser base to as many as some 200 advisers in the coming years, and is mapping out new US markets to enter. In mid-2019, the firm said it was setting its eyes on a base between 100 and 200 financial advisers over the next ROCKEFELLER CAPITAL MANAGEMENT five to eight years, a target executives are sticking with. Randazzo speaks with Business Insider at a conference last summer. The firm has primarily hired teams of advisers from the big wirehouses like UBS, Morgan Stanley, and Merrill Lynch, the world’s largest wealth managers which have largely cut back on aggressively hiring experienced advis- adding diversity to their adviser ranks. ers and instead focus on training up new ones internally. Through June 30, 23% of Rockefeller’s employees are The new hires haven’t slowed. In early June, Rocke- non-white; 41% of employees identify as female, and 59% feller hired a Houston-based team overseeing some male. A spokesperson did not respond to a request for $500 million in client assets led by former UBS finan- comment regarding whether the firm has any Black financial adviser Shay Scruggs. Later in the month, the firm cial advisers. nabbed a New Jersey-based team of advisers from Merrill “As we continue to build our firm, we remain committed Lynch who oversee some $750 million in client assets, as to attracting a diverse, eclectic, and inclusive group of out- AdvsorHub reported with both moves. standing professionals that reflect all aspects of the society Executives say the virtual onboarding process hasn’t in which we live and work,” a spokesperson said. been painful; the firm uses Zoom or Microsoft Teams to Like Fleming, who was the head of Morgan Stanley stay connected. Wealth Management before leaving in 2016, Randazzo pre- “Our thought here was to be laser-focused on a particu- viously held senior roles at Morgan Stanley and Bank of lar segment of growing clients, and focus on your top-tier America’s wealth and investment management businesses. advisers in the marketplace who are at an inflection point He’s helped oversee the creation of five divisions across largely in their careers, and how they’re serving their fam- the US — northeast, southeast, south-central, northwest, ilies,” said Chris Randazzo, the president of private wealth and southwest — each with its own market leader. management and head of technology and operations, who In April the firm hired Brian Riley, a former executive is based in New Jersey and splits time between an office with First Republic, as head of its San Francisco office and there and headquarters at 45 Rockefeller Plaza. the managing director of private wealth management’s pa- “I would argue that we’re more connected today with cific northwest division. each of our employees and our teams,” Randazzo said. Like Riley, Rockefeller’s other division leaders have come “We’re certainly more connected with our clients. What from large or notable boutique wealth managers. For in- we’re seeing now is everyone is fully functional from their stance, Michael Outlaw, who joined the firm in August 2018 homes, or vacation homes.” as a managing director overseeing recruiting and manag- The firm is also growing at a time when the very white ing wealth advisers in the eastern US, joined from Morgan financial services industry tries to renew commitments to Stanley. He opened Rockefeller’s Atlanta office. racial diversity, and wealth managers are laser-focused on Rockefeller is eyeing a sixth division in Chicago to es- Samantha Lee/Business Insid- er

from legacy wirehouses to independence. “One of the biggest challenges you hear from folks who are working at the big firms right now is that they don’t feel great about the idea of bringing a son or a daughter now into the business, given the changes that they’ve seen take place at those firms,” Dupuy said. “What they like about us is that we’re going to give them a lot of autonomy with respect to how they grow and build out their team.” The wirehouses have become “heavy-handed” over time in the style that they oversee teams of advisers, with a lack of freedom in how they grow and operate their practices, he said. The firm has also grown the family office segment, run by Tim O’Hara, where clients typically have at least $50 million invested, though there is no concrete minimum. The business has 25 dedicated client advisers (distinct from financial advisers, who are in the private wealth unit), four of whom joined this year. O’Hara, who was president and CEO of Goldman Sachs’ family office and wealth-planning unit Ayco before joining Rockefeller in May 2019, plans to hire some 25 client advisers over the next three years. Hiring the next generation

While Rockefeller mounts itself as a force within the independent wealth management space, the industry is ROCKEFELLER CAPITAL MANAGEMENT grappling with a dire dynamic where far more advisers Timothy O’Hara are leaving or retiring than are entering. “We love a team that’s been established where they’ve tablish over the next six months to a year, and will hire a division leader for that region, too. It’s also setting its sights on four other markets: North- ern New Jersey, Walnut Creek, California, Scottsdale, and Houston. Over the next three to five years, he could see Rockefeller having a presence in some 20 to 25 cities. Staying selective

Still, they are not trying to have a foothold in every single market. They’re trying to retain the prestige of a brand name that oozes opulence and splendor like no other, after all. The name synonymous with New York’s high society and influence across industries has roots in the days of oil barons, when John D. Rockefeller founded Standard Oil in 1870 and became the first billionaire in the US. The team decided early on “that we didn’t want to have a Rockefeller office in every city, on every street corner,” said Chris Dupuy, Rockefeller’s national field director for private wealth management who works in tandem with Randazzo and other private wealth officials in that business line. The firm will likely continue hiring primarily from major wealth managers and investment houses similar to JPMor- gan Securities, Dupuy said. Before joining Rockefeller in ROCKEFELLER CAPITAL MANAGEMENT November 2018, Dupuy was the president of a unit inside Focus Financial Partners geared toward drawing advisers Chris Dupuy clearly been thinking about that next generation,” Dupuy strategic partnerships, who joined the firm the month it said. “Where they’ve put advisers in place within the team launched from Morgan Stanley, heads up that group that structure that perhaps are younger or are from a different meets four times per year. background that would play better with the next-gen type But they’re not looking to train up advisers in a of client.” centralized way like its larger rivals do, with thousands of The firm has also convened a next-generation advisory new advisers entering the rigorous multi-year programs. council inside the firm, O’Hara noted, like other firms who Randazzo doesn’t envision building that out. convene groups of children of clients and other younger “I don’t think they have a lot of success over a long period people associated with the firm in an effort to keep con- of time,” he said, referring to the programs. nections — and assets — in the family after its current cli- “We’re going to try to remain small, where all our teams ents are long gone. know one another — every one of us, from Greg and myself The council involves people including some Rockefeller down, are intimate with each of those teams. We know their family members like Ariana Rockefeller, William Rockefel- strengths. We try to develop together as a firm and as indi- ler, and Ryan Rockefeller; James Rothschild, a trustee for viduals, and the same goes with understanding and being his family’s foundation; and Lacey Ann Tisch, the daugh- intimate with our client base. We think about all of those ter of businessman Andrew Tisch. things,” Randazzo said. “I know I went a little long-winded Grace Yoon, the head of business development and on that answer, but it’s important to us.”