As Merrill Lynch pulls the rug on much of its business with non-U.S. resident retail clients, smaller firms continue to welcome the clients and brokers Merrill has abandoned.
Bolton Global Capital, a Massachusetts-based independent broker-dealer and registered investment adviser, said this week that it has opened a San Diego office with former Merrill Lynch nonresident client complex director James Jiao as branch manager. Its first team, composed of 23-year Merrill veteran Samuel Nunez and a client associate, joined on Wednesday.
The moves follow Merrill’s decision to tighten the reins on working with retail clients outside the U.S. because of tightened regulatory and legal restrictions ranging from anti-money laundering laws to the Foreign Corrupt Practices Act.
The Bank of America-owned company sold its overseas private client business to Julius Baer in 2012, and has truncated the list of client home countries it will work with to 29 from around 85. Last summer it doubled minimum opening balances on new non-U.S. residents to $5 million in 21 countries and gave brokers until October of this year to bring grandfathered balances up to $1 million.
Merrill earlier dictated that nonresident account owners annually travel to their U.S. office to personally affirm their ownership.
Merrill brokers specializing in non-U.S. accounts have consequently been jumping to a host of small firms such as Bolton as well as less restrictive competitors such as Morgan Stanley. Smaller firms are just as sensitive to new laws and regulations but can absorb the extra costs of scrutiny because their overall overhead is so much lower than larger firms, Bolton Chief Executive Ray Grenier told AdvisorHub in an earlier interview after he hired several Merrill teams in Miami.
To compete with the likes of Morgan Stanley and its vast support machine, Bolton is offering advisors about 85% of their production up to $500,000 and 90% over that amount. Once costs such as rent and support-people salaries are deducted, most advisors reap payouts of about 70%, well above the close-to-50% for top producers at wirehouses, Jiao has been telling prospects.
Bolton’s San Diego office operates as Transatlantic Investment Partners, which Jiao established to work with his mostly Germany-based clients after he left Merrill last year, and clears on the brokerage side primarily through Pershing. Jiao had been with Merrill for almost 18 years, helping to manage several of its nonresident client offices.
Nunez, who has worked as a professional tennis player, has a client book of $125 million focused primarily in Mexico and produced more than $1 million of revenue in the previous 12 months, according to an internal memo from Grenier announcing the move. He has been with Merrill in San Diego for his entire brokerage career, which began in June 1993, according to Finra’s BrokerCheck database.
Joining him at Bolton is Lourdes Paola Gonzalez, who manages client service operations, the memo said.
Merrill’s San Diego nonresident office has about 9 advisers, about one-fourth of those employed at its height a few years ago, said a person familiar with the operation. Spokespeople at Merrill Lynch did not respond to requests for comment on Nunez’ move or on plans for the San Diego office.
