An en masse defection of advisors from several Waddell & Reed offices in the New York and Connecticut region has begun, according to a former executive closely involved in the situation.
Todd Slingerland, the former division manager in the Albany office, says that in recent weeks he and 35 advisors have left Waddell and joined a firm he founded, Capital Financial Planning, affiliated with ING Group’s Washington Square Securities. By the end of the week he expects the number of advisors who have left Waddell to join his firm to reach 50. But Slingerland claims not to be the engineer of the defections.
Slingerland says he was recruited by broker/dealer Washington Square Securities (WSSI), which then sought other Waddell advisors, Slingerland says. Soon after catching wind of Slingerland’s discussions with WSSI in March, Slingerland says he was suspended. (Calls to Waddell were not returned by press time.) On April 8, says Slingerland, he was fired, at which point Waddell issued a temporary restraining order against him. Waddell is one of the U.S.’s oldest fund managers, with $29.1 billion in assets from private clients and institutions. It also distributes more than 45 mutual funds via a network of affiliated advisors.
Last week, after nearly a month, the TRO was struck down by a New York state Supreme Court judge, Slingerland says. The TRO was filed to prevent Slingerland from taking his clients from Waddell to his new RIA, Slingerland says. The reason the TRO was overturned, says Slingerland, is because Waddell advisors are independent and do not operate under "do-not-compete" clauses. "They were trying to create a restrictive covenant after the fact," Slingerland says.