| NEW YORK
NEW YORK May 6 A team of Merrill Lynch advisers
in Bethlehem, Pennsylvania, whose senior member has been with
the firm for more than 40 years, left last Friday to set up an
Herman Rij, who joined Merrill in 1971, and partners Jason
Cort, Brian Cort and Kori Lannon - who is Herman Rij's daughter
- have established Quadrant Private Wealth to manage the money
of wealthy individuals, their businesses and charitable
organizations primarily for fees rather than commissions. At
Merrill, they managed between $900 million and $1 billion of
client assets, said people familiar with their move who could
not be quoted because the transfer has not been announced.
A spokeswoman at Merrill, which is owned by Bank of America
, confirmed they left the Bethlehem office but declined
to comment on their assets or annual revenue.
Calls to the partners were not immediately returned. Jason
Cort has been with Merrill since 1997, Brian Cort since 2002 and
Kori Lannon since 2008, according to regulatory records. At
least one associate also left with the team, said a person at
Merrill's Bethlehem office.
Veteran financial advisers at traditional brokerage firms
have been moving at a slow but steady pace in recent years to
set up their own firms, making fee-based investment advisers the
fastest growing "channel" within retail brokerage, according to
consulting firm Cerulli Associates. Some leave because their
former firms have raised the bar on the revenue they must earn,
but successful advisers also have been moving to escape
restrictions and bureaucracy associated with large firms,
particularly those who were absorbed into much larger banks as a
result of the financial crisis, or because they believe they can
earn more by running their own firms.
Quadrant made its move through Focus Financial Partners, a
New York-based company backed by private equity firms that buys
stakes in independent firms and sometimes finances their
start-up costs. Focus, which declined to comment before it
formally announces the arrangement, is part of a satellite
industry that has arisen to help so-called breakaway brokers
from the securities industry establish and operate their
The founders of Quadrant converted a shell firm called Chloe
Advisors, an investment adviser regulated by the U.S. Securities
and Exchange Commission, to hold its business, according to a
regulatory filing made on May 2 with the U.S. Securities and
Many independent firms charge fees based on the total client
assets they help manage and eschew pay-as-you-go commissions
based on trading of stocks, bonds and other investments.
Quadrant is mostly fee-based but its principals are maintaining
insurance licenses and the ability to receive certain
commissions by affiliating with an outside broker-dealer,
according to the disclosure document.
Quadrant's financial planning and consultant fees generally
will range up to $20,000 or more on a fixed basis, or up to $400
or more if a client chooses to pay hourly, according to the
filing. Clients for whom it manages investments directly or
through outside money managers will pay 1 percent annually on
their first $1 million of assets, ranging down to 0.4 percent on
amounts over $10 million, the filing said. Rates for amounts
above $25 million are negotiable.
(Editing by Eric Walsh)