Lebenthal Wealth Advisors, the 5-month-old wealth management firm with a famous name but zero assets, has received a major jumpstart with the arrival of a $1.2 billion breakaway Morgan Stanley team.

Carrie Gallaway, 37, and Andrew Stern, 38, joined Lebenthal as partners with an equity stake. They were part of the high-powered Sorenson Group at Morgan Stanley in New York.

"It's a landscape-changer for Lebenthal," says industry consultant industry consultant Tim Welsh, president of Larkspur, Calif.-based Nexus Strategy. "A team with a book like that can write their own ticket, and if they're successful at Lebenthal, they can attract other big teams."


Although technically a startup, Lebenthal has a distinguished Wall Street pedigree: The wealth management firm is part of Lebenthal Holdings, headed by Alexandra Lebenthal, whose family established the legendary bond-trading firm bearing the family name. In addition, CEO Frank Campanale was a top executive at Smith Barney and E.F. Hutton; Jeffrey Lane, chairman of the board of Lebenthal Holdings, held senior executive positions  at  Bear Stearns, Neuberger Berman and Lehman Bros.; and president Andrew Grillo was a regional director at Smith Barney.

"We were hugely impressed by senior management," Stern says. "They are very, very experienced, and the quality of the Lebenthal name and brand also attracted us."

Lebenthal's fixed-income expertise was also a draw, according to Gallaway.

"We have a multifaceted book, but buying fixed income and managing a municipal bond portfolio is a significant part of what we do," she says.


Gallaway and Stern, whose average clients are business owners and executives with between $5 million and $10 million in investable assets, say they did not receive an upfront payout. While Lebenthal offered equity participation, "there was no immediate financial incentive to join the firm," Stern says.

But the long-term payoff could be substantial.

Campanale says he wants to build a "high quality white-shoe firm with a boutique environment that offers very specialized and customized service." The company is setting up both a family office for ultrahigh-net-worth families and a mass affluent division catering to young couples building their wealth.

Lebenthal Holdings' asset management division has $600 million in AUM, and Campanale says two more wirehouse teams with several billion in assets are set to join Lebenthal Wealth Advisors within months. "Within five years," he says "I really think we will be over $25 billion."

Gallaway and Stern possessed "the perfect combination of all the qualities we are looking for," Campanale says, who knew the duo from his days at Smith Barney. "They're high-quality investment advisors and wealth managers, they can articulate a value proposition to clients and deliver on it, their compliance record is clean and they're able to relate to ultrahigh-net-worth clients."

Leaving Morgan Stanley for an independent firm that is backed by private capital -- and offering an equity stake -- also gives the relatively young advisors a "much better place to be" in their career arc, says industry consultant Jamie McLaughlin.

"In any public company, they will be faced with some pressure on earnings, which effects short-term behavior," McLaughlin says. "If Lebenthal can provide them with adequate capital, they will have a lot more freedom to better manage relationships and serve their clients first, not shareholders."

Read more:


Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access