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New Outfit Marries Wealth Advisory, Law Firm

Published by FUNDfire – An Information Service of Money-Media, a Financial Times Company
By Tom Stabile

A new wealth firm with offices in Florida and Ohio launched last month catering to high net- worth clients with investment and family office services, as well as an affiliated law practice. The three partners – former private bankers and directors with National City Bank and its Sterling multi-family office division – opened shop on Dec. 18 aiming to serve clients with more than $5 million.

Willow Street Advisors, based in Naples, Fla., is adding a twist to the relatively uncommon affiliation of wealth advisory and law practices. Such set-ups usually start with established law firms, but the new firm’s core focus is wealth management. The law practice might only break even, says Christopher Bray, managing director and co-founder in Florida for Willow.

“We see growth in the independent channel, especially from clients leaving the traditional firms,” Bray says. “Even though asset values have gone down so much, people realize they want and need professional advice.”

The timing for an independent start-up is probably good, given the financial markets havoc, says Andrew Klausner, principal of AK Advisory Partners, a strategic consultant in Boston.

“If they have the financial backing and a good initial client start-up and prospect list, it’s not a bad time to be starting,” Klausner says. “Unhappy clients are going to continue to move [away from traditional firms] and look for alternatives.”

Bray says Willow is awaiting the transfer of $120 million in assets from its initial 15 to 20 clients, and expects to have about $200 million in assets by the end of the first quarter. It has a few $30 million clients, and has taken on a few investors with portfolios as low as $2 million from prior relationships, but Bray says Willow aims to stick to a $5 million minimum after the first year. The three partners have put forth all start-up capital, Bray says.

The firm will offer both proprietary portfolio management and investing throughseparately managed accounts (SMAs), alternative funds, and other investments. It signed on this week with Fortigent, a turnkey asset management platform provider that focuses on product sets and portfolio construction for high-net-worth clients.

The mixed approach stems from the roots of the founding partners, who came out of both National City’s private banking arm, which runs proprietary products, and Sterling, which uses open architecture.

Bray and co-founder Richard Stevens, who is Willow’s CIO, had both worked forNational City’s private bank in Florida before they left in 2007. Bray previously had worked with the Sterling division in Pepper Pike, Ohio, and when he moved to Florida, a colleague named David Kearns took his slot. Kearns is now Willow’s third co-founder, and works out of Akron, Ohio.

Stevens, who in the past had managed money for the Bacardi family through the Bank of Bermuda, serves as portfolio manager for Willow clients who want in-house asset management. Bray says initially only a few clients are tapping into the Fortigent platform, with about 25% of the firm’s asset base, but he adds that he expects the share to grow to 40% in a few years.

Investment management will be Willow’s basic offering but it will add in family office services – such as tax, estate, and generational succession planning – for larger accounts.“The family office world is the main space we want to play in,” Bray says.

The firm has seven staffers on the wealth management side, but only Bray and Kearns will staff the boutique law firm they are calling Kearns Bray. That’s because it ispositioned as an extra service for Willow clients, though Bray says it could also generate some referrals to Willow. The two partners, both of whom are attorneys, will only spend about 20% of their time on the law practice, Bray says.

Many professional practices have opened wealth management arms, but most are accounting firms. Many of the top 100 regional accounting firms have wealth practices, with a handful topping the $1 billion mark in assets. The practice is less common with law firms, though Boston has various examples, such as Nixon Peabody Financial Advisors, an offshoot of the Nixon Peabody law firm, and Silver Bridge, which was renamed last year but remains affiliated with WilmerHale, a large law firm.

Willow and Kearns Bray will be separate entities so that Stevens can have a full stake in the wealth management arm, Bray says. He would not be able to hold a stake in the law firm because he is not an attorney, Bray says.

The idea of starting up a law firm simultaneously is unique, says AK Advisory’s Klausner. He says a key to making the model work is ensuring that the partners offer referrals to other practitioners from either practice in case some clients have concerns about conflicts of interest.

“The partnering approach is certainly right for this marketplace,” he adds. “Clients are looking for trusted advisors.”

Cleveland-based National City, battered by the recent financial markets tumble, was recently acquired by PNC Financial Services Group of Pittsburgh in a deal that closed at year’s end.

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