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Merrill Brokers Managing $700 Million Go Independent

A Merrill Lynch building is shown in downtown San Diego, California

Four Merrill Lynch brokers are taking a gamble, joining the growing ranks of breakaway brokers.

Advisers Ross Fox, Matthew Papazian, Marti Awad and Sarah Keys resigned from the Bank of America Corp.-owned brokerage on Monday and launched their own practice, Cardan Capital Partners, in Denver. Mr. Papazian, a 26-year veteran of Merrill, says he and his partners “wanted to place a bet on ourselves and get equity in ourselves.”

More financial advisers at the major firms are ditching their positions at companies like Bank of America and Morgan Stanley to launch their own practices or join one already established, in part, because of the allure of an ownership stake in a private practice. Those stakes come with big advantages but also risks.

Altogether, the four advisers managed more than $700 million in assets at Merrill, most of that through fee-based relationships. Mr. Papazian expects most of their clients to follow in the coming months as the advisers created and managed their own model portfolios for clients.

Operating under that model, the Cardan advisers eventually realized that they didn’t use or need many of the products supplied by Merrill and the other wirehouses. They are launching the firm with the support of Dynasty Financial Partners, a New York-based firm that provides independent adviser teams access to a platform for trading, clearing, research and other support services.

Mr. Papazian said he and his partners did weigh offers from other brokerages, but decided that the firms were similar and didn’t represent the best model in the wealth-management industry now.

“One of the things we tell clients is that the way we run portfolios is you want to be skating where the puck is going to be,” Mr. Papazian said. “We are now skating to where the puck is going to be and we expect other wirehouse advisers to wake up and see where their peers are moving to in this space.”

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Paul

The author Paul