Merrill team goes its own way, signs on with Focus Financial

Cites restrictions on institutional accounts, alternative investments

Feb 7, 2012 @ 2:22 pm

By Andrew Osterland

+ Zoom
(Bloomberg)

A team of Merrill Lynch Wealth Management advisers, frustrated with new rules at Mother Merrill preventing them from signing up new institutional accounts, has launched itself as an independent registered investment adviser with the help of Focus Financial Partners LLC.

John Beirne Jr. and three other Merrill advisers operating as the Beirne Wealth Management Group in Milford, Conn., opened up shop as an RIA on Feb.6. Three support staff also are joining the team, which manages close to $2 billion in assets.

The move was prompted by Merrill's move to stop advisers from signing up new accounts managing money for government agencies, cities and states. “About 60% to 70% of our revenues come from that space,” said Mr. Beirne, a 33-year veteran of Merrill Lynch. “[Merrill] basically told us we can't grow in that market.”

Mr. Beirne said that additional new rules at Merrill prohibiting the use of some alternative investment vehicles also were cramping his team's investing style. “This change would have interfered with an investment process we've been using for 35 years. We would have lost accounts,” Mr. Beirne said. “Either we had to change our process or change firms. We decided to change firms.”

According to Mr. Beirne, Merrill said the changes were needed because of new compliance regulations in the Dodd-Frank Act. When he spoke with other large wirehouses, however, Mr. Beirne said they are not instituting similar rules. Merrill Lynch spokeswoman Selena Morris confirmed the departure of the advisers but provided no further comment.

The new firm, Beirne Wealth Consulting LLC, will continue to manage money for institutions, as well as for high-net-worth individuals and families. It will use Fidelity Institutional Wealth Services as its primary custodian for client assets.

The move represents another coup for Focus Financial, whose affiliated firms now manage more than $45 billion in assets.

“Over the last year, we've seen an accelerating trend of sophisticated adviser teams' looking to make the move toward an independent, fiduciary-based business model,” Rudy Adolf, chief executive of Focus Financial, said in a press release. “The BWC deal further demonstrates the trend.”

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