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03/12/2012

A Look at Why So Many Merrill Financial Advisors Are Running from the Bull


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EfinancialCareersMerrill Lynch seems to be hemorrhaging top financial advisors.

The announcement this week that a Merrill private banking team managing more than $1.4 billion for dozens of families, foundations, endowments, unions, and pension plans had joined advisor-owned HighTower was just the latest in a series of recent breakaways.

Many top Merrill Lynch financial advisors have been bidding goodbye to the bull of late. An estimated 70 percent of the largest advisor moves over the past three months have involved Bank of America/Merrill Lynch financial advisors, according to Investment News, which has been tracking such moves.

Those jumping ship include a number of teams that handled billions of dollars in client assets.

John Beirne Jr., a Merrill Lynch veteran who managed about $2 billion, quit last month to strike out on his own. He started his own firm, Beirne Wealth Consulting LLC, a Registered Investment Advisor (RIA) in Milford, CT, taking three other Merrill advisors along with him. The reason: a new Merrill mandate against signing new public pensions clients. Beirne told RIABiz he knew he had to go since 60 percent of his group’s revenues were derived from institutional clients with the bulk of them public funds. Two of his biggest public clients are the Connecticut municipalities of Milford and Bristol.

Merrill spokeswoman Selina Morris told eFinancialCareers that regulatory, reputational, and litigation risk are increasing among public funds, and because of that, Merrill decided last year to no longer accept new pension accounts from municipalities.

Beirne reportedly had help making the transition from Focus Financial Partners, LLC, which is known as an aggregator or “tuck-in.” An aggregator lets RIAs join established advisory firms to bolster their capabilities.

Other breakaway brokers who’ve departed Merrill recently include:

  • Houston-based Merrill Lynch advisors Scott and Grant Fortney, two brothers who together managed $885 million, and who moved to Morgan Stanley Private Wealth Management in January.
  • Harry Wall, a veteran Merrill Lynch advisor, who joined Raymond James in Louisville, KY, last week along with three other Merrill advisors. The team collectively managed over $850 million and generated $2.7 million in revenue.

So, why is everyone jumping ship?

“The merger with BofA was the beginning of the end of ‘Mother Merrill’ and some of the best producers knew it back then,” Dave Moran, a partner with Experienced Advisors Recruiting, LLC in Fort Lauderdale, FL, tells eFinancialCareers. Now, he says, the expiration of some signing bonuses, as well as limitations on certain products and the bureaucracy of the firm, are making it clear that “the bloom is off the rose.”

Then too, wirehouses in general have been steadily losing ground in the wealth management space, where their piece of the pie fell to 43 percent by 2010 from 50 percent in 2007 and is expected to dwindle to 35 percent by the end of 2013, according to Boston-based Cerulli Associates, and some say Merrill is just an acute example of what’s happening industry-wide.

Robert Wolfe, Managing Director of United Capital Financial Partners’ South Florida Region, tells eFinancialCareers, “The wirehouses have unilaterally increased their rigidity in terms of how they will compensate brokers at varying levels of production,” and that they are also reducing the products many advisors have utilized to build successful practices such as with Beirne’s team.

−Fred Yager, Editor, eFinancialCareers, North America

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