$1B Merrill Team Bolts to Form Indie Firm

October, 2008

A four-member team running nearly $1 billion in client assets left Merrill Lynch last Friday and on Monday turned on the lights for a new wealth management shop in Westport, Conn. The move is yet another high-profile example of the rising outflow of wirehouse brokerage advisors to the independent wealth channel.

Formerly known as the LLBH d/b/a Coastal Bridge Advisors Group of Merrill Lynch, the team of Bill Loftus, Bill Lomus, Kevin Burns, and Jim Pratt-Heaney are now principals and partners of LLBH d/b/a Coastal Bridge Advisors Group Private Wealth Management and are focusing on high-net-worth investors. None of the partners was available for comment late yesterday, but a spokesman for the firm confirms it is up and running.

LLBH d/b/a Coastal Bridge Advisors is telling clients that it plans to continue its strategy of tapping external investment managers and products, and is touting its independence and a broad wealth management approach as its strengths. Its Web site states that the firm “can provide unbiased, objective advice to our clients without any conflicts of interest” and that “it’s like having your own family office.”

The four partners have long résumés in the wirehouse brokerage world. Burns started out at Paine Webber in 1981 and made stops at Oppenheimer & Co. and Smith Barney before joining Merrill in 2000. Lomus also started at Paine Webber in 1981 before heading to Prudential Securities, then Smith Barney, and finally Merrill in 1998. Pratt-Heaney began at EF Hutton in 1986, which eventually became part of Smith Barney, and then joined Merrill in 1998. And Loftus started out at Merrill in 1986, left for Smith Barney, then returned to Merrill in 1998.

Now at their new firm, Loftus heads corporate executive services, lending, and alternative investment operations; Burns is in charge of new client asset acquisition and client service and contact; Pratt-Heaney oversees asset management; and Lomus is a Certified Financial Planner leading the investment planning process.

The abrupt launch announcement – as well as the apparently extensive pre-planning – is reflected on the LLBH d/b/a Coastal Bridge Advisors Web site, which features a lengthy “frequently asked questions” section clearly geared toward clients who may be wondering what the changeover means for their portfolios. The questions it answers include “What do I have to do to remain a client?” and “Where are my assets going? How will I know that my assets are safe, especially with everything going on in the markets?” Other questions include “Now that you are independent, what protects me from fraud?” and “Will you have access to the same investment managers and financial products that you use today?”

And for the “What happens if I don’t sign?” question, the response is: “If you don’t sign you will remain a client of Merrill Lynch / Bank of America. They will select a broker from the Westport area to help you manage your assets.”

The Web site also states that the client approach at LLBH d/b/a Coastal Bridge Advisors will flow through a relationship manager acting as “single point of contact” for the wealth management process, which includes investment strategy and planning, tax planning and management, estate and trust planning, and philanthropy services.

LLBH d/b/a Coastal Bridge Advisors has chosen Pershing, a division of Bank of New York Mellon, as its custodian and asset management platform provider. The new firm’s Web site explains the choice by pointing to Pershing’s “size, stability, and the fact that they have been virtually untouched by the sub-prime crisis currently roiling the markets…In a wonderful piece of positive reinforcement, the Treasury Department recently selected the Bank of NY as the custodian for all the assets held under the Troubled Asset Relief Program.”

LLBH d/b/a Coastal Bridge Advisors’s decision apparently is evidence that Pershing has some traction so far in its stated strategy of primarily pursuing the higher-end market in its bid to attract wirehouse advisors to form new independent advisor shops. Pershing is competing with Schwab Institutional, Fidelity Investments, and TD Ameritrade for new business from such “breakaway” wirehouse advisors.

Pershing also recently signed on a breakaway advisor team from UBS Financial Services that left in August to form Syntrinsic Investment Counsel in Denver, according to a Pershing spokesman. That team ran about $550 million for a client base of endowments, foundations, faith-based institutions, and large families seeking philanthropic planning advice, and is serving the same types of clients in the new firm. Syntrinsic is led by Benjamin Valore-Caplan as managing partner and senior advisor, as well as Brook Kramer and Alexander Gordon, both advisors.

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