Alex. Brown, formed in 1800, is the oldest and one of the best investment banks in America – a relatively small house that, while it may have lacked in diversity and reach, the firm more than made up for in service, knowledge, and attention to detail. This boutique nature is one reason why larger Deutsche Bank acquired then BT Alex Brown in 1999 and absorbed their advisors into their firm.
To its credit, when Raymond James – an efficient, well-run company with a broad and diversified platform – took over Deutsche’s private client group in 2016, they pulled the name “Alex. Brown ‘’ out of the mothballs and used it to rebrand its shiny new toy. It was a smart move, at least in theory. It just wasn’t the right one. For yet again, in the last 25 years, the name has gone thru multiple owners from Bankers Trust, to Deutsche Bank, to now Raymond James.
More importantly, there was a clash of cultures with the acquisition, even though the person who shepherded the integration for RayJay was a real “advisors’ manager.” Haig Airyan, a brilliant, well respected leader, was zealously protective of the advisors under his watch. As their voice and conscience in the boardroom, he had an almost savant-like ability to stand in their shoes, see the world through their eyes, and make decisions that kept them happy, motivated, and productive. However, as many other executives of late, in 2022 Ariyan decided to leave the firm to lead a new independent asset and wealth management firm, Arax Partners, with $8.6B RedBird Capital Partners.
The marriage of cultures turned out to be a veritable sh*t show, as many of Deutsche Bank’s best and most experienced advisors – the ones with the greatest books and highest net worth clients – often felt like fish out of water. After all, RayJay carved out its niche as a firm whose management, for all its differentiated and diversified platforms, always focused the bulk of its energies on the mid-level/$750K producer and average net-worth client. And in 2023, Raymond James made the announcement that the firm would be dissolving the Alex Brown name, and all those advisors would be dumped into the normal Raymond James system.
Alex Brown advisors have been notably considered the cream of the crop, highly regarded for their UHNW clientele and having to navigate sophisticated solutions within the Raymond James platform. With the recent divisonal changes, however, it should be considered prudent that those advisors be reminded from time to time of their valued position and options.
Ray Jay, you know it already, it’s fine – very basic. You are familiar with the animal you have and the work-arounds you need to get things done. While it may not be the most lucrative option, it is the simplest path by staying put and continuing to grow and earn upwards of a 60% grid and eventually retire at the firm.
2. Leave for Competitive Banks & Brokerage Firms.
It’s a lateral move, more of the same. Some platforms can be more sophisticated, some possibly with a better name, platform or technology. It can have the security of a big brand name behind your desk, as well as the potential up to a 375-400%+ deal. Transitioning to another brokerage firm may gross the advisor a sizable deal offer, but is still to another bank platform.
By deciding to go independent, breakaway advisors can now say they truly own their own book, and not the firm. The value of the business now becomes not a factor of what the firm would offer the advisor in a retirement program, or even a transition to another wirehouse for the usual 300-350% deals, but as a value in the independent marketplace with multiples starting at 4x off your top line revenues and commanding an 8-10, even as high as 16-18x multiple off your EBIDA upon liquidation. All earnings are now 1099 income, no longer taxed as a W2 paycheck, and equity classified as long-term capital gains.
An advisor no longer has to re-invent the proverbial wheel and spend countless hours and money to set up their own RIA. With today’s technology, independent firms can provide the day to day support that advisors are used to from a wirehouse and for a much smaller price than in years’ past.