Thoughtful, Balanced Wealth Advisory.
Ex-Merrill FAs Make a “Clean Break” for Independence – Financial Advisor IQ
By Murray Coleman
November 11, 2015
After 26 years with Merrill Lynch, advisor Matt Papazian left Friday to open his own independent RIA in Denver, Cardan Capital Partners. Joining him at the new firm are four other ex-Merrill advisors and three staffers. The team managed $725 million at the wirehouse and is getting back-, middle- and front-office support from Dynasty Financial Partners. Cardan Capital is using Schwab as its custodian and Envestnet’s trading platform.
Q: What was the major reason you decided to leave Merrill?
A: Over the years, we’d built a practice based on giving affluent families highly customized service — almost along the lines of a family office. We just got to the point where we felt like Merrill’s platform of services wasn’t broadly based enough to cover all of our clients’ needs. It’s not like Merrill didn’t give us ample resources. But we’ve seen a real explosion in recent years in terms of third-party service providers entering the wealth-management marketplace. So we really wanted to take advantage of more choice in order to provide our clients with a richer and more robust experience — on both the service side and the product side.
Q: Can you provide some examples?
A: In no way do I want to minimize the service menu we had at Merrill. Merrill does a decent job, but in some areas we’re finding the independent market to be much more cutting edge. A good example is in research used by our investment team. At Merrill, we had access to some outside analysts. But ultimately, we were held to Merrill’s opinions on investments, which we thought at times were somewhat limited by the firm’s investment-banking relationships. Also, when we need to help clients find a new mortgage for their home or lending programs for their businesses now, we’re not limited to just Merrill’s network.
Q: Now do you expect fewer conflicts of interest?
A: Yes, that’s a primary reason why we’ve moved to total independence as a practice. Not only are we now free of any big bank’s previous business ties, but we’re also able to pick and choose a much wider variety of investment analysts to follow on a regular basis. Also, we’re finding that operating our own practice is giving us more freedom to choose different types of investment products and providers. So we’re able to manage portfolios in the same way as at Merrill, but we’ve got a lot more tools at our disposal.
Q: Do those improvements carry over to your new technology platform?
A: Yes, we’re very excited about the software we now have for our clients. For example, we’re using MoneyGuidePro as our main financial-planning suite. And for performance and trading functions, we’ve adopted Tamarac from Envestnet. The net result for our clients is that they get far-more-customized reports on how they’re doing in meeting their financial goals. The system we’ve been able to put together in a fairly short amount of time with Dynasty’s help has really been superior to anything we had at Merrill.
Q: Does that include the ability to aggregate account data from different custodians?
A: Yes, one of the best features of our new technology platform — both for our advisors and for our clients — is the ability to aggregate everyone’s assets no matter where they’re held. It’s important to point out that Merrill has been getting on that technology bandwagon. But we still felt handcuffed in working with assets custodied outside the bank. That’s no longer the case with the wider breadth of technology we’ve been able to implement at the new firm.
Q: How does the move impact your clients’ fees?
A: We’re making sure there’s no uptick in fee structures. At the same time, we’re stressing increased transparency in what people are paying — and getting — for our services. Our reporting systems now allow us to clearly break out for clients exactly how much goes to trading costs, custody charges, management fees and any other financial-planning-related fees. At Merrill, we told clients very clearly what their total fees were each quarter. But it was difficult to break those costs out as succinctly as we now are able to do at the new firm.
Q: Do you expect that forming your own company will improve your compensation?
A: We actually made a very conscious decision not to take a large check from another wirehouse or independent broker-dealer to move. We felt like that sort of arrangement would be a lateral move that would benefit only us, not our clients. So we decided to make a clean break and go fully independent. We’ve had to dip into our own savings to start a business, but in the long run we feel like it’s going to pay off. Our belief is that we’ve taken the shackles off our potential for growth as a practice, while giving the families we serve a broader menu of services.