What they don’t plan to do, he said, is try to boost returns by leveraging the firm’s assets.
“That has not proven to be successful,” he said. “We are an advice-driven firm, we provide execution.”
Stifel has “a really solid name as a regional firm,” meaning one that has a few thousand advisers instead of upwards of 20,000, said Mindy Diamond, CEO of Diamond Consultants LLC, a Chester, New Jersey-based search and consulting firm for the brokerage industry.
Regional brokerages can be attractive to financial advisers who prefer more access to senior leadership and don’t want to be “one of the 18,000,” she said. They also appeal to those who value culture and size more than the price of a transition package, she said. Regional firms typically pay two times an adviser’s trailing 12-month revenue with bigger companies paying 3 to 3 1/2 times, Diamond said.
Advisers looking for a regional firm might prefer that Stifel is based in St. Louis instead of New York because it has a Midwest culture that “works to its advantage,” Diamond said. Known for Budweiser beer, barbecue ribs and ragtime music, the city has a metro population of 2.8 million.
Stifel’s headquarters are less than a mile from Busch Stadium, home of the St. Louis Cardinals baseball team, which has won two World Series titles since 2006. A pair of infield box season tickets cost about $9,500 for 2013. Similar seats for the New York Yankees are about $30,000.
Kruszewski grew up in South Bend, Indiana, about 100 miles east of Chicago. A fan of Chicago sports teams when younger, his allegiances are now “St. Louis through and through,” he said.
Kruszewski’s background as an accountant has been a factor in the firm’s success integrating acquisitions, investors including Rudman say. A graduate of Indiana University in Bloomington, Kruszewski joined Robert W. Baird & Co. in 1989, where he served as a managing director and chief financial officer of the Milwaukee-based wealth-management and investment- banking firm, according to a 1997 statement from Stifel.
He decorates his office with several bull and bear statues of his own, and parks his black Porsche in the basement garage. Pointing to the golf clubs in his office, he says, “None of those putters work,” before laughing and admitting it might be the golfer who’s at fault.
Being based in St. Louis gives Stifel a cost advantage over larger competitors, Kruszewski said. Running the same operation in New York would be “a different story” when it comes to expenses, he said. Still, he said he doesn’t expect New York to lose its status as the financial center of the world.
“People say, why do you keep building the firm in light of all these declining revenues?” Kruszewski said. “Why not?”
(Bloomberg - Laura Marcinek)