Like many advisors of his generation, Bob Wacker, president and chief investment officer of R.E. Wacker Associates Inc. in San Luis Obispo, Calif., decided last year to tie up the loose ends in his succession plan. And like an increasing number of his colleagues, he decided to sell his firm to a bank, in this case Pacific Capital Bancorp of Santa Barbara, Calif.

"Part of my own study group's discussion-and everybody else's discussion now-has to do with growth of the business and succession planning," says Wacker, who is 58. He believes he made the best deal possible for himself, his clients and his staff.

The Pacific Capital Bancorp deal to acquire R.E. Wacker closed in January. Wacker manages $475 million with 10 staff people serving 360 clients. "I owned the whole firm and we sold the whole firm," Wacker says. The bank paid $6.9 million cash for the practice and over the next five years will make a future payment based on the financial performance of Wacker's firm. That final earnout will be shared with the staff, Wacker says.

I've been surprised by the number of top independent advisors who, like Wacker, did their research and due diligence and then chose to be acquired by a bank. Last month, we reported on the sale of Shine Advisory Services in Denver to Western Alliance Bancorp. Like Shine, Wacker was first approached by a friend who operated a similar firm and sold out to a bank.

In Shine's case the friend was Dennis Miller, a planner in Phoenix whose business had exploded from  $450 million to $1.7 billion in the five years after he was acquired by Western Alliance. In Wacker's case, it was Lon Morton of Morton Capital Management in Calabasas, Calif., who had sold to Pacific Bancorp a year earlier. Morton "affirmed that the bank was getting out of his way and letting him work independently," Wacker says. "The bank recognizes that the firm does well on its own. We still will make our own investment and personnel decisions."

Like Shine, Wacker talked with a number of potential suitors over the last several years, including Rudy Adolf, who is buying up firms and bringing them under the umbrella of Focus Financial in New York. "Rudy Adolf is buying up financial planning firms but also insurance and pension administration firms," Wacker says. "Many are fee only, but the firms are not solely fee only."

Wacker also talked with Mark Hurley, president of Fiduciary Network LLC in Dallas, who buys strictly fee-only, fiduciary firms. "The fiduciary model of Mark Hurley is better for people to whom fee-only is a core value," like him and like Shine, Wacker says.

Hurley's firm buys part of the advisory firm and provides liquidity for the younger staff to buy out the older partner or partners. Yet neither Shine nor Wacker chose to go with Hurley. Hurley's firm doesn't offer the same degree of liquidity as Pacific Bancorp did for Wacker. On the downside, choosing to be acquired by a bank for cash, "does take away the entrepreneurial opportunity for the younger people," Wacker acknowledges. Shine's take on that was different. Simply put, she didn't want to saddle her younger generation with so much debt.

But I don't see any of this stuff. Perhaps I'm looking backward and perhaps I'm allowing my own personal experience to cloud my idea of the ability of a bank to be objective, detached and even-handed when it comes to acquiring fiduciary, fee-only investment advisors. Is that redundant? Fiduciary and fee-only? It shouldn't be, yet for some reason it feels like it is.

As for me and my dim view of bankers, I'm still smarting from an experience I had five years ago with some private bankers.  A book I wrote called In Search of the Perfect Model (for a financial planning firm, not a TV reality show) had just come out to some decent reviews and I was asked to talk with a group of what we used to call private bankers and are now referred to as bank wealth managers.

Like others in the business, these bankers were "in search of the perfect model" to capture that growing number of ultra-high-net-worth clients that everyone is after. I told them that I did most of my work with independent advisors and that one unmistakable trend was that wealthy clients want to pay for advice, not for products.

My comments were not welcome. Instead, these wealth managers talked about how to get more "wallet share" and how to do more "cross-selling." One wealth manager said: "I'm not going to sit here and be forced to apologize for selling both products and advice." He left.
A couple of others drifted away, and then I was given the hook by the person who had made the mistake of inviting me to discuss "perfect models." The atmosphere reminded me of an old-fashioned shunning. No one said boo. Or goodbye. Or thanks. Or, "Do you need to use the restroom?" I'd never been given such a cold shoulder after a speech. This meeting left me with a negative impression of the civility, the flexibility and the open-mindedness of bankers.

So in the years since then, it's been interesting to watch the banks that have what it takes-guts, foresight, smarts?-to step away from the pack. They will be the winners.

The acquisition of Sullivan, Bruyette, Speros and Blayney by Harris Bank had just been completed at the time I gave my speech and much of the advisory industry was watching that acquisition with great interest. And since then, I've spoken to a number of people in the business who have polished up my image of bankers. For example, a year ago I interviewed Maria Elena Lagomasino, who left a position as chairman and chief executive officer at JP Morgan Private Bank to set up a firm that would provide independent, objective advice to high-net-worth individuals.

Lagomasino is now chief executive officer of GenSpring Family Offices LLC, based in Palm Beach Gardens, Fla., which is a subsidiary of Sun Trust of Atlanta. And she is mighty impressive in her insistence on independence, among other things. William H. Rogers Jr., corporate executive vice president at SunTrust, told me that when the bank started segmenting the different parts of the business, it looked at very high-net-worth clients and "it became clear to us that these clients wanted far more of a boutique kind of feel, with someone sitting on their side of the table offering advice rather than products. When SunTrust invested in GenSpring, formerly Asset Management Advisors, Rogers says, "The smartest thing we did was to keep it independent."

It wasn't popular and it wasn't easy to do, he says, particularly when it meant giving up good private banking clients to Genspring. "It required a lot of education to teach people that AMA is not a competitor," he recalls. "We've made a lot of headway, but it's been a long road." But complete independence for the wealth management subsidiary is "the secret sauce," Rogers says, and he will not compromise that.

Wacker believes that joining the Pacific Bancorp family makes the best strategic sense for his firm. Pacific Bancorp owns six banks with 50 branches along the central coast of California. Pacific owns a bank in San Luis Obispo, where Wacker's office is located. He will become a fully owned subsidiary of Pacific Bancorp but will continue to operate as R.E. Wacker Associates.

He also believes that private wealth managers may be opening new vistas for bankers. Pacific Bancorp's trust department has invested in the "traditional buy and hold type stuff," Wacker says. But both Morton and Wacker use a lot of alternative investments. The bank is exploring some new investments for its own trust department, perhaps as a result of the examples they've been shown by wealth managers.

So now we have a handful of role models-and some banks that get it. Wacker's acquiring bank looks to be one of them. Judy Shine, too, will keep her firm's name and will continue with her financial advisory firm for at least five years. Wacker says, "I'm not even required to refer people to the bank." 

I'm happy to admit I am wrong about bankers. I'm happy to see that a whole new realm of the financial services industry recognizes that integrity depends on independence. The more people who recognize the value of selling advice rather than products, the better results we'll see. But I don't think I'll give a speech at a bank again, even if I'm invited.  

Mary Rowland can be reached at [email protected]. She has been a business and personal finance journalist for 30 years, a half dozen of them as a weekly columnist for the Sunday New York Times. She wrote a column called "Practice Points" for Bloomberg Wealth Manager for six years. She speaks regularly about money and values. Her six books include two written for financial advisors: "Best Practices," and "In Search of the Perfect Model."