Dow Jones

Street Moves: Merrill Team Sets up Independent Firm

October, 2008

NEW YORK (Dow Jones) A team of financial advisors who managed nearly $1 billion in client assets left Merrill Lynch & Co. (MER) on Friday to set up their own independent firm, according to a spokesman for Pershing LLC, a unit of Bank of New York Mellon Corp. (BK).

The team’s departure underscores some financial advisors’ interest in leaving wirehouses, or large retail brokerages, after a year of huge write-downs, falling deferred compensation levels and the recent wave of industry consolidation.

“I just think we’re going to see this cycle of enhanced activity going on with financial advisors changing their allegiances for months to come,” said John Shields, principal and co-founder of MainStay Consulting Group, a management consulting firm.

“We are only starting to see the beginning of volatility in this area,” he said.

The group, which was known as the LLBH d/b/a Coastal Bridge Advisors Group at Merrill, includes Bill Loftus, Bill Lomus, Kevin Burns, and Jim Pratt-Heaney. The four brokers opened an office in Westport, Conn., where they will manage investment strategy, tax and estate planning, and philanthropy needs for clients. Pershing will serve as custodian for the group.

A Merrill Lynch spokeswoman confirmed that the team had left the firm.

Loftus worked at Merrill for more than 10 years, after previously spending two years at the firm until he left for Smith Barney, a unit of Citigroup Inc. (C) in 1993.

Lomus was a 10-year Merrill veteran and spent four years at Smith Barney and 13 years at Prudential Securities, which was acquired by Wachovia Corp. (WB) in 2003.

Burns worked at Merrill for more than eight years and at Smith Barney for more than seven years. Pratt-Heaney spent over 10 years at Merrill and more than four years at Smith Barney.

The four brokers’ move from Merrill comes a month after Bank of America Corp. (BAC) agreed to acquire the firm. The deal has led to speculation that Merrill could stand to lose some of its more than 16,000 brokers to the independent channel or to other firms.

One Merrill broker in the northeast U.S. said that while going independent has appeal, evidence that such a shift is a trend is only anecdotal. He added that it would be shocking if “more than a couple hundred went that route.”

“It’s just so difficult to take care of all of the nonadvisory functions in a non-Merrill environment,” the broker said.

In addition, many financial advisors at Merrill are likely to stay put until Bank of America announces its retention package for the brokerage force.

The retention package is “the best-kept secret since D-day,” the broker said.

Earlier Wednesday, Bank of America announced three Merrill Lynch executives, Greg Fleming, Tom Montag, and Bob McCann, would stay with the combined firm to oversee global banking, securities and wealth management.

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