Ex-Merrill Lynch FAs Open UHNW Indie RIA
After 13 years at Merrill Lynch, advisor Xerxes Mullan announced Tuesday he’s left to open Avestar Capital in New York. Joining him at the new independent RIA are two other ex-Merrill advisors. Mullan says his seven-member team managed more than $300 million at the wirehouse.
Q: You were part of the Private Banking and Investment Group at Merrill that focuses on ultra-high-net-worth clients. Why did you see a need to leave a relatively elite part of Merrill?
A: We wanted to continue to grow by moving into the multi-family office marketplace. In our view, the independent world tends to be far more holistic across a family’s entire balance sheet. That’s especially true for the clients we’re attempting to serve in the future.
Q: How so?
A: We’re not captive to one platform and we’re now able to access a larger suite of products and services. That type of flexibility is going to be extremely important to our practice since a number of our families maintain multi-country residences and have business interests globally. So these clients are looking for a highly integrated approach to managing all of their assets. Like a multi-family office, we want to be seen as the aggregator of their data across different public and private investments.
Q: Do you feel less constrained now with these types of clients?
A: It was just a different type of business focus in the past – we were in the traditional wealth management business. Now, we’re going to be able to expand into a true multi-family office model where we can serve entrepreneurs who want to invest in alternative investments that are outside of the typical wirehouse universe.
Q: Do you have more flexibility as an independent to develop a different sort of technology platform?
A: Yes, and that’s a key reason why we looked to Dynasty Financial Partners for transition support. They’re helping us to pick out the best-in-breed software systems. For example, we looked at Black Diamond and Addepar for our aggregated reporting systems. Most single- and multi-family offices use one or the other. We’ve chosen Black Diamond, given the unique needs of our clients.
Q: What are you doing on the back-office front?
A: We’ve decided to go with Fidelity’s clearing and custody solutions platform because they’re a leader in the family office space. We’ve also struck an agreement with PKS (Purshe Kaplan Sterling Investments) as our broker-dealer. But our primary relationship on a daily basis is going to be with Fidelity’s back-end solutions.
Q: How are you strategically moving into the multi-family office space?
A: We’re going to start with the traditional business foundation we’ve already built. That’s primarily focused on three types of clients: serial, developed and emerging entrepreneurs. We’ve also got a strong mix of affluent families and C-level executives. Going forward, we see moving into the family office space from a practice management standpoint as a natural progression. Along those lines, Dynasty is helping us to connect and share best business practices with other advisors who already manage multi-family offices.
Q: What was the hardest part of the move?
A: Probably the most difficult aspect was simply getting all of the Fidelity paperwork across to clients and helping them to understand the reasoning behind our move. Given that a lot of our families are entrepreneurs, we’re finding a lot of support. Partnering with an industry leader like Fidelity is also reassuring to our longtime clients.
Q: Did you consider becoming employees at another brokerage or large firm?
A: We did do a lot of due diligence. Given the business we want to build, it really became apparent to us that we needed to move into the independent RIA space. It gives us the best opportunities to choose the right solutions for our clients with the least amount of conflicts of interest.
Q: What about your compensation outlook?
A: We never thought about this from a compensation point of view. Over the long run, we expect that if we do a good job in serving our clients this business will keep expanding and our equity value in this firm will grow.
Q: Had you ever started a new business before?
A: No. And we found that even after all of the preparation it was a somewhat daunting task to start a new venture. Over the last few months, we really started to focus on the next chapter of our careers, and it took a lot of long hours to properly work all of the details out with both Dynasty and Fidelity to get this off the ground.
Q: Any suggestions for other advisors who might be thinking about breaking away?
A: What is crucial is choosing the right partners with the right amount of experience. Don’t try to do it alone. Pick firms that know the type of business and client you really want to serve. And take into consideration the views of your entire team – without their full participation, you won’t be able to ensure continuity in service. We’ve in fact made everyone on our team a partner and owner in this new business.