Many Wire-House Advisors Turn Independent in Retirement Prep


The four biggest U.S. brokerage firms are facing an exodus of employees who are finding they can make more money and save on taxes by taking their clients and starting an independent firm before they retire.

Prices are rising for independent brokers because of demand from investors and other firms, while supply is low because advisers have made steady money through a five-year bull market and are waiting to sell. At the same time the major brokerages — Bank of America’s Merrill Lynch, Morgan Stanley, Wells Fargo and UBS — are fighting to keep their money-making assets from walking out the door.

For Jim Pratt-Heaney and Bill Lomas, two long-time brokers who left Merrill Lynch in 2008 to found Connecticut registered investment advisory group LLBH Private Wealth Management, the financial benefits were key. Both told Reuters they had no doubt they would get more money selling their shares of their independent business than Merrill Lynch would have offered them.

“The idea that we didn’t own equity in our business as an adviser with a major wirehouse was concerning to us,” said Lomas, 56.

Almost 100,000 brokers – or about one-third of the industry – are expected to reach retirement age over the next ten years, according to research firm Cerulli Associates, and the thoughts of many are turning to how to pay for it.

Read more from Reuters here.


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