When the going gets tough, the tough go shopping, really. Alexandra Lebenthal, for instance, bought back from Merrill Lynch the rights to her iconic family-owned-company name. Then she built a new firm in the worst business climate since the Great Depression.
Now president and CEO of Lebenthal Holdings, on Park Avenue in New York City, she is bringing fresh ideas to RIAs and entrepreneurial financial advisors: the firm’s nine-month-old Lebenthal Wealth Advisors division offers an open platform to a broad range of products, high payouts and partner participation.
A Princeton grad, Lebenthal, 50, has led her new enterprise to become the nation’s No. 1 woman-owned firm in corporate debt and equity underwriting; Crain’s New York Business named it the top woman-owned financial services company in New York in 2011.
At 31, Lebenthal took the reins of the family’s municipal bond brokerage business from her father, Jim Lebenthal, of “Built by Bonds” TV and radio ad fame. The company was founded as municipal bond specialists by Alexandra’s grandparents, Sayra and Louis Lebenthal, in 1925.
Alexandra joined in a sales capacity in 1988 after working in the muni bond department of Kidder Peabody. By 1995, she was helming Lebenthal.
The firm’s new and expanded incarnation focuses on personal wealth management, high-net-worth family offices, and corporate debt and equity underwriting.
Wealth Advisors caters to clients with $2 million to $20 million to invest. Leading the division are Jeffrey Lane, formerly of Bear Stearns Asset Management, Neuberger Berman, Lehman Brothers and Smith Barney; and Frank Campanale, previously of First Allied Wealth Management, Smith Barney and E.F. Hutton.
Andrew Grillo, earlier at Smith Barney too, is Wealth Advisors’ president. James B. Lebenthal, who started at Goldman Sachs and joined sister Alexandra in 2007, is CIO and market strategist.
Alexandra, a former treasurer of the Securities Industry and Financial Markets Association (SIFMA), and her father co-founded the new firm in 2006. Five years before, the famed family company had been sold to AdVest, which, in 2005, was acquired by Merrill Lynch. At that juncture, the Lebenthals opted to exit.
ThinkAdvisor recently chatted with Alexandra, the mother of three, about launching a business in stormy weather, what makes Wealth Advisors unique and the art of recruiting female advisors. She declined, however, to discuss her work with the secret, elite Wall Street society, Kappa Beta Phi, because, well, that’s a secret.
ThinkAdvisor: On one hand, you’re a New York society woman, on the boards of cultural institutions and attending galas in super-fancy designer gowns; on the other, you’re a high-profile working woman running a business. That’s a rare combo!
Alexandra Lebenthal: Yes, it is; and whenever the press refers to me as a socialite, I want to scream because, obviously, that’s not who I am at all. But I do enjoy going out. Dressing up and looking pretty takes away a lot of the stress of dealing with money and investments.
Why did you start Wealth Advisors?
So many financial advisors at big firms are utterly miserable, but they don’t want to take a big check to go to another firm because they know they’re just going to another miserable situation. They’re looking for a place where they can have full, open architecture and be a partner. What, then, are you offering instead of a signing bonus?
We have a much higher payout than other firms. It averages about 60% as opposed to 40%, or what advisors are earning now.
What do you have against paying “a big check” upfront?
It doesn’t make economic sense for a company to do that. But the big firms have to; otherwise, they’ll lose more people than they’ll get. It’s this circle they all go in.
What makes Wealth Advisors unique compared with other firms?
The open architecture. There’s a huge range of choices, with opportunities to choose from any number of different managers and platforms to pick what’s right for clients. At the big firms, there’s a lot of talk about open architecture, but it’s sort of a pre-fab house. Also, our brand is very well known but not one that you’ll see on Page C1 of the Wall Street Journal [as being involved in] scandals. It’s a pristine name and almost 90 years old.
What’s your business plan for Wealth Advisors?
Over the next five years, the goal is to get to $25 billion in AUM. That’s modeled on about 100 individual brokers, though some [with us now] have partners.
You already had a wealth management business. Why start Wealth Advisors?
It was small. I consider that to be the seed that Wealth Advisors will grow from. Those are our in-house portfolio managers, and we have added to them by bringing in the international equity team of Heckman Global Advisors.
You’re targeting what you call “the lost affluent.” Who are these folks?
A lot of people want somebody to handle everything with a dollar sign in front of it – not just investments but bill paying, tax work, health insurance [admin]. That exists if you have $100 million but not $2 million to $20 million. So I’ve described these people as “lost” because there wasn’t a place for them before.
Is your father, who is now chairman emeritus, still active in the company?
He’s 86 and comes in every day. He’s active in a number of different things – not operationally involved but still a municipal bond cheerleader and an important part of the fabric of the company.
Does he give you business advice?
Once in a while. I don’t usually ask him. This morning he told me I was amazing, which made me really happy. But of course, in my typical way, I said, “No, I’m not” and walked out the door.
Yours was an historic family company; yet you sold it. Why?
There were a number of reasons. Family shareholders were looking for an exit. It was an opportunity that was hard to pass up. Whether or not it was the right decision, who knows. But we’re here now.
You had to comply with a yearlong non-compete. What did you do between 2005 and 2006?
I went to Bergdorf Goodman every day! I played with my puppy. I enjoyed myself. But I always knew I’d start a new company. I definitely got restless.
You were determined to have the rights to the Lebenthal name returned to you. Was it an ordeal?