Greg Clifford, founder and CEO of the Clifford Group in Newton, Massachusetts, says he “grew up” at Merrill Lynch, entering the firm’s trainee program after being an associate at the firm for a few years.
The advisor flourished at the wirehouse, gaining nods as a Forbes Top Next-Generation Wealth Advisor in 2018 and Best-in-State Next Generation Wealth Advisor in 2019. But as Clifford passed the decade mark at Merrill, the idea of breaking away planted itself in his mind and stayed there.
“I didn't really know what the future was going to be and I didn't know if I was going to like it, but I always had this entrepreneurial mindset where I wanted to know how to build a business,” Clifford, 32, says.
He’s not alone. More than 3,050 advisors leave wirehouses each year and nearly 3,800 exit regional broker-dealers,
“There's a lot of different paths and there's been many new entrants, which makes it confusing for advisors,” says Louis Diamond, president of Diamond Consultants, a New York-based recruiting firm that helps RIAs and brokerage houses hire advisors.
Clifford started his journey by calling ex-wirehouse advisors who had made the transition to the model he envisioned: a standalone hybrid. “They were very receptive and willing to have conversations,” Clifford says. “Everyone seemed really invigorated by the opportunities they had ahead of them and so from there I ultimately made the decision: ‘OK, this is what we need to do.’”
More than three-quarters of those who passed the test studied at least 10 hours-per-week, according to a recent study.
Diamond, who worked with Clifford on the transition, says such preliminary exploration is key. “Just being educated and understanding the pros and cons of the business model — what you get, what you don't get, etc. — is to me one of the most important things before [you can] even know if the trade-off is right for you,” he says.
In discussions with Clifford, Diamond went so far as to play devil’s advocate with him, pitching him the benefits of the wirehouse model. “It pushed me to reflect on all aspects of the business before ultimately making the decision,” Clifford says.
Clifford then sat down with JC Murtagh, whom he had recruited into the trainee program a few years earlier, and whom he had approached to join him in his new breakaway, to gain clarity on the objectives of their new firm.
The heart of this crucial discussion shouldn’t center exclusively on the “pain points” of an advisor’s current firm, says Brian Hamburger, attorney and founder of MarketCounsel Consulting, a regulatory compliance consulting firm for RIAs. Rather, he says, the conversation needs to be framed “the same way that most advisors would need to start with their clients: What are their needs, goals and objectives?”
Clifford says that after such discussions, “We started to feel almost obligated to make the transition to be able to truly provide the type of care [for our clients] that we wanted to. … to truly be objective — a fiduciary for our clients.”
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Their own career goals crystallized as well. “Ultimately we wanted to build a brand, not build someone else’s,” he says.
A successful breakaway involves getting to know work colleagues who will soon be business partners on a deeper level, observers agree. Family demands, personal finances, time constraints, long-term career expectations — all these topics and more must be discussed before the move. “You can’t allow familiarity with their colleagues to gloss over difficult conversations that successful partners must have,” says Hamburger.
Clifford and Murtagh talked frankly about the initial division of labor at the new firm. They agreed that Clifford, who has a wife and young son, would concentrate on getting the advisory end on its feet while Murtagh would act as a “Jack of all trades,” performing administrative and back-office tasks. Seven months after the launch, Clifford says Murtaugh, 27, is preparing for his upcoming CFP exam and looks forward to transitioning into a financial planning role. The firm has hired a director of finance and is bringing on a director of operations.
Looking back on the breakaway process, Clifford notes the grueling time demands but also called the process “freeing and exciting.”
“We realized there really wasn't anything keeping us there other than these unchallenged thoughts,” he says. “Once you really look in the mirror, it was, ‘Why aren't we doing this? We can do this. We should do this.”
