Three big industry names investment banker and muni bond scion Alexandra Lebenthal and ex-Wall Street honchos Frank Campanale and Jeffrey Lane - are joining forces to form a new wealth management firm, Lebenthal Wealth Advisors.
The New York City-based firm will be a division of Lebenthal Holdings, which includes the investment bank and brokerage firm Lebenthal & Co. and also offers family office services.
Lebenthals previous wealth management firm, Alexandra & James, had a five-year run, from 2007 to 2012. The firm, which was briefly affiliated with Tel Aviv-based Israel Discount Bank, joined the Dynasty Financial Partners network in January 2012 with nearly $1 billion in assets, but ended the association that summer after Michelle Smith spun off her own firm, Source Financial Advisors, which has remained with Dynasty.
Lebenthal Wealth Advisors hopes to gain an edge in the cut-throat competition for independent advisors by offering higher payouts, an open platform to a wide array of products, and participation as partners in the firms growth and success, says Lane, who will be chairman of the board of Lebenthal Holdings.
Whats more, an awful lot of people worked for us in a previous life and would like the opportunity to do it again, claims Lane, the former chief executive officer of Bear Stearns Asset Management, chairman and CEO of Neuberger Berman, and vice chairman of Lehman Brothers. He was also vice chairman of Travelers Group, where he ran the companys Smith Barney subsidiary.
The firms brand name and access to capital markets via Lebenthal & Co. will also be significant differentiators, says the new firms president, Andrew Grillo.
In a recent interview, Rudy Adolf, chief executive of the countrys largest roll-up firm, Focus Financial Partners, asserted that any independent RIA firm attempting to build a national brand was foolish because they simply couldnt afford it.
But Alexandra Lebenthal, whose grandparents founded an iconic municipal bond firm in 1925 that became a well-known consumer brand thanks to tireless promotion on TV and radio ads by her father, James A. Jim Lebenthal (currently chairman emeritus of Lebenthal Holdings), begs to differ.
The Lebenthal name comes into play in a strong way in this business, she says. It stands for integrity, and can go up against the big firms very well.
Lebenthal declined to discuss the firms marketing budget, but cited her ability to generate publicity. This is a very easy story to tell, she maintains.
Indeed, the Lebenthals sold their fabled muni bond brokerage in 2001 to a firm that was subsequently acquired by Merrill Lynch, which sold the rights to the Lebenthal name back to Alexandra in 2006. Lebenthal & Co. is now the largest equity and corporate debt underwriter of any woman-owned firm in the U.S., and Alexandra was described in a flattering Fortune magazine profile last year as an extraordinary networker and a fixture in the Manhattan society pages.
The new firm will target potential clients with minimum investable assets of $1 million and aim for an average client with around $2 million or $2.5 million, says Campanale, a veteran of two iconic, but now extinct Wall Street brokerage houses E.F. Hutton & Co., where he was a national director, and Smith Barney, where he was president and chief executive of the firms Consulting Group, with responsibility for nearly $300 billion in private client and institutional assets.
Insurance products will be a big part of Lebenthals very innovative platform, along with private equity, alternative investments and hedge funds, according to Campanale. Well also have a Unified Managed Account platform, he adds, "bringing in model portfolios from institutional-quality investment advisory firms that will be optimized for tax efficiency.
Last year Campanale made a splash trying to resurrect E.F. Hutton, but the venture has yet to get off the ground in the U.S., although Campanale, who remains an investor in the firm, says he expects E.F. Hutton to launch in Canada by the end of the year.
When Jeff [Lane] contacted me, I saw it as an opportunity that was a much better fit with the way I see wealth management evolving going forward than E.F. Hutton, Campanale says.
The new firm has a lot of potential, says Dynasty president and chief executive Shirl Penney. Lebenthal is a good brand and trusted in the northeast and Florida, and having a real capital markets business is something they can leverage. When you combine that with a proven wealth management executive like Frank Campanale, it can be attractive to a lot of advisors who want a more independent model but dont want to run their own business.
Lebenthals new firm drew mixed reviews from veteran industry consultant Tim Welsh, president of Larkspur, Calif.-based Nexus Strategy.
This validates that the retail distribution channel through financial advisors still remains paramount, Welsh says. While the institutional guys battle it out for a few basis points on both the sell and buy side, retail wealth management continues to deliver 100 basis points for just being there.
But he also questioned the value of legacy Wall Street brands. Executives from Wall Street past cant help trying to re-invent themselves, Welsh says. Didnt Campanele just try to resuscitate E F Hutton? Once again, we see ancient, New York based brands like Lebenthal trying to dust themselves off and make a go of it for individual investors.
Municipal bonds are under siege, he adds. As a legacy muni bond house, Lebenthal has very few options to remain relevant in a declining market. I would say this is very much a Hail Mary pass.
- National RIA Brand a Foolish Idea, Focus Financials Adolf Says
- Four Firms to Pay $105K in FINRA Fines
- Powerhouse Regional RIAs Rising, Dealmakers Say