Why a $37 Million UBS Team Walked Away From Tens of Millions to Launch Their Own Firm

In an industry where top advisor transitions are often fueled by eight-figure offers, very few teams make a move without a private equity backer or wirehouse deal on the table. Rarer still is a move that takes place mid-contract, which requires advisors to pay back tens of millions in forgivable loans.

But that’s exactly what ex-UBS Private Wealth advisors Denis J. Cleary III and Gregory M. Devine just did. The duo, who joined UBS in 2020 after long careers at Goldman Sachs, exited five years later to launch their own RIA, 71 West Capital Partners, with offices in Boston and Los Angeles.

This was not a case of dissatisfaction or being pushed out. To the contrary, Cleary and Devine had been one of the most successful Goldman-to-UBS recruits in recent memory and effectively doubled their production from $20 million when they joined the wirehouse. The team had become cheerleaders for UBS and gave testimonials to other former colleagues at Goldman.

But over the past year, Cleary and Devine woke up to the reality of how dramatically the industry and economics of ownership had changed. They realized that every day at UBS was another day spent building something that they did not own. They were paid as employees, not owners and operated in a closed architecture system. Staying behind was actually costing them money.

For top teams, who are often already running sophisticated, self-directed businesses, the ability to have full control over their own destiny is also invaluable. This move gives us the clearest sign that for at least this duo, it was worth repaying tens of millions and forgoing an additional backer at this stage.

At 71 West, Cleary and Devine now have the freedom to grow their practice into an enterprise and build their firm as they see fit without the big-firm constraints. They chose their own custodian (Pershing), a best-of-breed technology stack, product menus, research, performance reporting, etc. They control their marketing and how they grow their firm and can address client needs by shopping across the Street.

Clients who had remained loyal even through the garden leaves and challenges of leaving Goldman are standing by them once again as they also realize the value of independent advice. And as an RIA, Devine and Cleary can move money faster and easier than ever with low-friction onboarding and ACAT improvements.

Devine and Cleary are savvy advisors who also understand the math. They can access the institutional-grade custody and trading platform and turnkey support systems that replicate wirehouse infrastructure at a fraction of the cost. Efficiently managed RIAs of their caliber can expect payouts of around 70% after operational expenses.

The delta that wirehouses have to collect on their quest to hit 30% margins now goes to the advisors’ pockets.

For a $37 million practice, a 20% improvement in payout from the 50% wirehouse rate is an additional $7.5 million per year. That’s more on an annual basis than the $6.6 million that UBS was forgiving on their notes each year assuming they had received a generous deal of 400% of their annual revenue at the time of their move.

Plus, the real advantage lies in equity. If they eventually seek an outside investor, they can sell a minority interest or stake in their practice at a multiple of around six to eight times earnings before owners compensation. And unlike a wirehouse deal, that would be taxed as capital gains, not ordinary income.

This move was a referendum on the bank model and value of independence. And it’s a move that more advisors are willing to take now, particularly as waiting poses more risk than leaving. In addition to the opportunity cost of staying behind, today’s market backdrop is unusually favorable.

Clients are satisfied with strong performance. Business momentum is high. RIA valuations are near historic peaks. While there is never a “good” time to leave, there are moments when waiting becomes a greater risk.

Midterms and other geopolitical events could turn the market. Valuations may compress as private equity becomes more conservative, and wirehouses are turning up the defenses. Meanwhile, independent platforms have never been stronger, more high-tech or more advisor-friendly.

This year has been marked by moves that show that the independent movement has entered a new phase. It’s attracting top teams like Cleary and Devine who are willing to write a check, not take one. There are also plenty of options for teams with niche practices or those looking for a supported independence platform as evinced by the breakaway of a $129 billion AUM corporate stock plan team in Atlanta and a $25 million-revenue team’s jump to NewEdge.