This past year, Bolton Global, one of the 50 largest independent broker dealers in the United States, has seen its team of financial advisors grow substantially throughout the country, and especially in Miami, an important place in the international wealth management industry. The firm has announced the appointments, which, in turn, served as a call for other advisers contemplating, or in the process of, a change. From November 2015 to December 2016 the digital version of Funds Society has published such a series of appointments – The Perez Group, Eduardo Robson, Daniel Aymerich, Soraya Batista-Gracía, Eddie Moreno, Alex Astudillo, Ángela Canas, Tanya Duarte and Archivaldo Vásquez, Felipe Ballestas, Oscar Guevara, Samuel Nunez, Ricardo Morean, and Christian Felix – that we wanted to speak with Ray Grenier, CEO of the firm, to discover the keys to this firm’s irresistible model.
Bolton Global is one of the 50 largest independent broker dealers in the US. With 32 years of track history and 45 branch offices, it ranks among the top of independent firms in annual revenue and AUM per producing FA, across the US. This last year, Bolton Global has seen more than 15 advisors with international clients join the firm, many of whom are based in Miami.
What is the key? Why do financial advisors choose to join Bolton Global? How do they arrive at the firm and what does it offer them? “We do not have an FA recruiting team, we have grown fundamentally through word of mouth.” The best tool to attract new teams of financial advisors are the FAs that already work in Bolton, who refer other teams with quality assets and extensive experience. “A happy team that has the full support of the organization to carry out its work is the best ambassador to attract new talent to the firm,” says its CEO.
Ray Grenier, CEO explains: “Our platform allows FAs to establish their own brand name, capture the equity in their book of business and generate a substantially higher net income after expenses. Bolton provides turnkey solutions to incorporate the business, develop a company logo and company promotional materials, develop and establish a professional website, set up office infrastructure and train staff. We also provide all of the back office and compliance support to process the business efficiently and effectively in accordance with industry rules and regulations.
Through Bolton, FAs have access to all of the capabilities, products and services available through the major wirehouses and private banks.”
We are talking about Financial Advisors who had prior successful careers at the major US wirehouses in 90% of cases, with a client book of over $100 million and 15 or more years of industry experience. Most of them are US citizens or visa holders. Bolton also has several affiliated financial advisors operating from offshore locations in a fully registered capacity.
When talking about attracting clients, Grenier says the financial crisis of 2008 highlighted the importance of financial institution safety and security. BNY Mellon is a global financial institution with the highest safety rankings among the largest US banks. This provides clients with the security that their assets are held through a solid financial institution which also supports international business.
He adds: “BNY Mellon is the oldest US bank, founded by Alexander Hamilton in 1784 and is the world’s largest custodian with more the $30 trillion in assets under custody. It’s clearing subsidiary, Pershing is the world’s largest clearing firm servicing over 100,000 financial advisors working at financial institutions in over 60 countries.
In addition to providing clients with superior safety and security, the BNY Mellon companies furnish Bolton with all of the capabilities, products and services of the major wirehouses and private banks for both domestic and international clients.
As an independent firm, Bolton offers clients a pure wealth management play as the firm does not engage in investment banking or underwriting and generally avoids illiquid products.”
Bolton has a wide mix of customers from the United States, Latin America and Europe. Among the international clients, the firm has a strong representation in Argentina, Spain, Uruguay, Mexico and Panama.
The average account size is over $500,000 with the average relationship over $1 million. Portfolios hold a mix of stocks, bonds, ETFs and mutual funds managed either by the FA or by third party asset managers.
In the international business, around 40-50% of the assets are in mutual funds. Bond portfolios also prevail, as is customary in Latin American clients. Ray Grenier also points out that some of its representatives work with portfolios of UCITS ETFs domiciled in Europe, which represent a tax advantage over US-based ETFs.
Although Pershing is able to carry out the full range of services its clients require, Bolton’s financial advisors (FAs) can also work with a number of local banks that offer advantageous conditions for leveraging their asset portfolios, including international mutual funds. Thus, the FAs that join the Bolton platform can carry out the transition of the assets of their clients without losing functionalities over the broker dealers in which they worked previously.
Bolton provides FAs with a complete set of research tools to manage their client portfolios including recommended buy-sell lists, model portfolios, analytics, and performance reporting. Financial advisors have the flexibility to advise clients on the composition of their investment portfolios in accordance with the client’s objectives and risk profile. “In addition, FAs can use our Separately Managed Account (SMA) platform with access to more than 100 major asset management firms with multiple investment styles to construct and rebalance portfolios on a discretionary basis.” The CEO says. Approximately 40 percent of the business is fee based with 60 percent conducted on a commission or transactional basis.
In addition to portfolio management, Bolton offers clients the full range of account services including on-line account access, BNY Mellon VISA card, check-writing, ACH and bill payment, portfolio lending, multicurrency holding and reporting as well as trustee services. Bolton also provides access to execution and clearing on exchanges in 45 countries.
Over the last 5 years, Bolton has increased revenue and AUM by an average of 17 percent annually. The company experienced 23 percent growth in 2016. Grenier, says, excited: “We believe that industry conditions will continue to be favorable to Bolton allowing the firm to grow in the 15 to 20 percent range for the next 5 plus years.”
Among the most immediate expansion plans for the branches, the leader says: “The company believes that the Miami market will offer continued strong growth opportunities for the next several years.” He announces Bolton is in the process of opening an office in New York City to house a major wirehouse team that will be joining the firm in 2017 and reminds the firm opened an office in San Diego last year. Additionally, they are evaluating real estate options in Houston. “It’s a market that we look favorably on to open a new office because the establishment costs are relatively low – especially the cost of renting the office – and the international wealth management market has clear potential.” However, for the moment the growth focus for the non-resident business is still in Miami.
The environment and its good consequences
There is no doubt that Bolton Global’s business has grown as a result of the strategic shift of some firms with respect to its international clients. In Grenier’s words: “Many major financial institutions have withdrawn or significantly curtailed their servicing of international clients over the last 5 years. Bolton has definitely benefited from this environment. Sustainability in the international wealth management business requires a firm to limit account opening for only the highest quality clientele and to commit significant resources to AML compliance and surveillance.”
But Bolton has been in market for many years now. “Bolton recognized the potential of the international market as early as 2008 when a Merrill Lynch team in Texas with a non-resident clientele joined the firm. In recruiting from the major wirehouses and private banks, we realized that FAs from these firms would be more likely to convert to the independent business model if we provided them with a complete turnkey package to transition their book including brand development, office infrastructure, staff training and on-site support.”
In Dec 2016, Bolton had 30 international FAs managing aprox. $3.5 billion, and in the last year those advisors joining the firm’s Miami office collectively manage over $1.2 billion in client assets. In 2016, the firm added 5 teams and 5 individual FAs with over $1.5 billion in AUM. (Note: As a significant amount of these assets are still in the process of transfer, they would not all be included in the $3.5 billion number cited above.)
They are all in the process of monetizing the value of their book, improving their compensation and growing their practices with a supportive business partner. All of the recruits mentioned above have joined the firm as a result of a referral or recommendation by another Bolton advisor.
“The firm has the benefit of a robust pipeline of recruits to continue to add high quality teams through 2017 and beyond. In any case, we do not want to have a multitude of FAs, but a good ratio of assets and revenues per representative, “says Ray Grenier, giving clear priority to quality over quantity.
Bolton Global is an introducing broker dealer under the 1934 Securities Act. Introducing broker dealers open, manage and service client accounts but do not maintain custody of the assets. The custodian for Bolton’s accounts is BNY Mellon – Pershing. The custodian generates all of the monthly statements, trade confirmations, checks, wires and issues the credit cards and checkbooks which clients use to make purchases and pay bills. BNY Mellon – Pershing also provides the electronic systems which FAs and clients use to view their accounts and execute transactions on various security exchanges throughout the globe. Bolton also has an affiliated SEC registered investment advisor, Bolton Global Asset Management. Bolton’s business mix is roughly 40 percent domestic and 60 percent international.