News » From the ashes of 2008, a thriving firm was born

From the ashes of 2008, a thriving firm was born

Four Merrill wealth advisers go out on their own in the heart of the crisis to start something new

On Oct. 16, 2008, the six-column subheading that crowned the Wall Street Journal cried, “Stocks Post Biggest Drop Since 1987 Crash.”

Meanwhile, Merrill Lynch & Co. was reporting its fifth straight quarter in the red — a loss of more than $5 billion for the period — underscoring the deteriorating conditions that preceded its takeover by Bank of America Corp.

On Oct. 17, four Merrill wealth advisers delivered their resignation notices, not because their company was imploding but because they were striking out on their own. Kevin Burns, Jim Pratt-Heaney, Bill Lomas and Bill Loftus went on to start Coastal Bridge Advisors. Since then, the group has more than tripled its assets, to over $1.6 billion, according to chief operating officer Jeff Fuhrman. Coastal Bridge Advisors serves only 175 households, with average assets of more than $9 million per client. “They did it the day after the world collapsed,” said Howard Diamond, managing director at Diamond Consultants, a recruiter used by a primary Coastal Bridge Advisors backer, Focus Financial Partners. “My God, that’s just an amazing thing, to have faith in yourself to do that at that particular time. Not too many other people did that.” A successful transition meant retaining clients and acquiring new ones, a feat Coastal Bridge Advisors said it accomplished entirely from referrals. Other challenges included hiring the right people, such as Mr. Fuhrman, to run business operations.

When it comes to attracting clients, the partners face some inherent disadvantages against the Wall Street giants they decided not to join. Wirehouses such as Morgan Stanley and private bankers like the Goldman Sachs Group Inc. dominate the marketplace for wealthy investors, controlling 70% of such assets. That compares with just 4% for registered investment advisers and multifamily offices, according to Cerulli Associates Inc.

“There are competitors out there … so you have to constantly evolve and improve,” Mr. Fuhrman said. “You have demanding, discerning clients that expect a certain level of service and attention.”

In the years since the financial crisis, top-tier RIA firms have been gaining steam and moving upmarket, Cerulli said.


Coastal Bridge Advisors, whose founders pitch themselves as a “virtual family office” and include veterans of the elite Merrill Lynch Private Banking and Investment Group, is winning notice for its efforts.

In October, the firm received a 2014 Best Practices Award in the InvestmentNews Financial Performance Study of Advisory Firms. Coastal Bridge Advisors ranked No. 2* in the category of firms generating annual revenue of between $5 million and $10 million. The financial performance study also found that Coastal Bridge Advisors makes excellent use of its staff, netting higher revenue per employee than most of its peers.

“You can’t have redundancies the way you could at Merrill Lynch,” Mr. Fuhrman said. “There aren’t seven backup players for every role. “The firm uses a management approach known as a “balanced scorecard,” in which staff members are assessed in part using metrics unrelated to financial performance.

Mr. Fuhrman, a former Salomon Smith Barney investment banker who ran the talent management group IMG Artists for nearly a decade, said the contributions of some essential personnel, such as compliance professionals, don’t necessarily show up on the bottom line. Those employees need feedback based on measurable benchmarks, however, he added. “You can’t grow efficiently and effectively if everyone is doing everything,” Mr. Fuhrman said. “You have to have a little structure. The challenge for me is maintaining that entrepreneurial bent without becoming bureaucratic.”

*DISCLAIMER: The InvestmentNews ranking is not indicative of future performance and may not be representative of any one client’s experience. There was no money exchanged in the receipt of this award. Out of 310 firms considered for the award, a total of 12 won the award.

December 2014