Cautiously, Stifel Emerges as an Investment Leader

There’s fame and then there’s infamy. Ronald Kruszewski, president and CEO of Stifel Financial, is clear on the type of attention he wants for his firm. Stifel has a long history and a national footprint, but he acknowledges it suffers from a lack of name recognition, even within the industry.

In an exclusive interview with On Wall Street, Kruszewski lays out his vision for how the firm will manage a revived public outreach and plans for further growth.

“We want to provide advice to people and entities that need it. We recognize that advice is delivered through entrepreneurial, talented people.”

This interview is part of our special report on the state of wealth management.

Several firms are expanding their presence on the West Coast. How does that jibe with what Stifel is doing? 

In 2007, we didn’t have anyone in California. Today, we have 37 offices and probably 600 people. So between investment bankers and public finance, we’re the No. 1 underwriter of negotiated public finance issues in the state.

When we talk about following the money, where else are the opportunities?

Following the money for the most part is making sure you’re following the generational switch in money, and not necessarily the geographic switch in money. The strategy needs to be toward generational [changes]. There will be a lot of money that is inherited and you have to make sure your business strategy and your thoughts are not only to your current clients, but also to the people who are going to inherit your current client’s money, or the people who are going to inherit the money of other firms. So follow the generations, not the geography.

That is a preoccupation that a number of your contemporaries have, with having to recalibrate how they serve aging clients, while at the same time trying to capture the new investor. What has Stifel’s approach been?

It’s just recognizing the generational differences in how people interact with society. My kids are obviously more active with social media and are generally active online. They don’t go to bank branches, they do everything online. So regarding your business strategies, you have to be building businesses in the way you communicate with your clients, both with those who [are active online and those who] may not be as technologically savvy as a 20-year-old who can type 200 texts a minute. But I don’t believe it’s an arms race in technology because wealth management in our practice is still about understanding people, relationships, and getting to know your client and their goals. Last I checked, computers have yet to show the ability to show empathy or reason.

That’s a general sentiment in the industry, yet at the same time it’s something your peers are investing in.

We invest in technology; I’m not suggesting we don’t. My point is that we need to make sure that we are designing technology that can help advisors serve their clients, not that we think that technology in and of itself is the end game.

There is a concern that with so many advanced tools and information sources at their disposal, younger investors are skeptical of the need for an advisor.

I have four kids and I watch younger people, and I don’t think that technology has yet to change the life cycle. You’re a young person and you have all the time to surf the Internet, and then you get married, you get a job and you have kids, you start to get money, but then you don’t have any time.

 There’s always going to be a segment of the population that are going to do it themselves. And maybe that’s a growing piece of the pie, I don’t know. But serious wealth will always want serious advice, and that’s not going to change. If anything, I think in general people want more leisure time. So I think it’s a great opportunity for our industry to provide valuable advice. What the industry needs to do is stop stepping on its own toes. I think the big problem is that a lot of young people don’t trust financial services because of all of these things that you read about in the press. I think that the challenge for the industry is to make sure that the next generation of investors trusts the system. That’s a bigger problem than communicating with them, technology-wise. But I do not believe the relationship aspect of this business is going away anytime soon.

Do you want Stifel to cultivate a public profile like some of the top firms?

Profile is a two-way sword. We certainly want to increase our profile. We struggle with the fact that for many in the industry, let alone clients, we’re not a household name. That said, the fact that for the last five years we haven’t been a household name has probably been good. There’s not a lot of profile that hasn’t dealt with lawsuits and scandal and that sort of thing.

You want to be famous; you don’t want to be infamous.

What’s your vision for Stifel?

Our strategy, from the day I became CEO in 1997, has been very simple: We want to advise, whether it is individuals who want to plan for retirement, corporations that want to raise capital, or school districts that want to raise money for their schools.

 We want them to come to Stifel to get business advice. That’s our goal, that’s our business plan. We want to provide advice to people and entities that need it. We recognize that advice is delivered through entrepreneurial, talented people.

So I know that we will be successful if we go from 6,000 people today to 12,000, because those additional people will mean that we are serving that many more clients. If we take care of those two objectives — getting people to join our firm and serving clients — then our stock price will take care of itself. 

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