After more than 18 months of touting efforts to resurrect the iconic brokerage brand E.F. Hutton & Co., the most vocal promoter of the venture, Frank Campanale, has jumped ship to try and breathe new life into another iconic brand, Lebenthal & Co.
The abrupt move by Mr. Campanale and at least one other person working on the project raises questions about the future of the celebrated re-launch of E.F. Hutton.
“I wish them well, and I'm still an investor,” Mr. Campanale said, but he declined to comment further on the status of the re-launch effort.
A core group of executives still on board at Hutton insist that the project continues to move forward with a Canadian broker-dealer launch expected within 30 days.
And a new Hutton brand in the United States is only about four months away, but the executives, who describe themselves as “proud alumni” of the Hutton brand that was last used in 1990, still aren't saying which advisory or broker-dealer model is to be used for the U.S. operation.
Mr. Campanale and Andrew Grillo, who was also working on the Hutton project, said this week that they would be joining forces with Jeffrey Lane to head up a new private wealth advisory division of Lebenthal Holdings LLC, a fledgling financial services operation with a storied past dating back to 1925 and $500 million under management.
“I was meeting with some private-equity firms over the past few months, and Jeff Lane showed up at a lunch meeting,” Mr. Campanale said. “I was trying to reel Jeff into the E.F. Hutton world, but he convinced me there is a better opportunity at Lebenthal for me and Andy [Grillo] both.”
That reference to a better opportunity could be translated into a more expedient opportunity, according to Tim Welsh, president and founder of Nexus Strategy LLC, a consultant to financial advisers.
“I had huge doubts about it when they first started talking about relaunching E.F. Hutton,” he said.
“Wealth management is hard, and you can't just put a stick in the ground and announce that you're here,” Mr. Welsh said. “And dusting off an old brand doesn't mean people will come knocking down your door to join the firm.”
Mr. Campanale alluded to soliciting support from private-equity investors, but so far no details have been provided regarding financial backers.
Mr. Welsh speculates that Mr. Campanale realized that he was digging himself in for more of a long-term commitment than he was comfortable with.
“I'm sure Frank just got bored,” Mr. Welsh said. “You need a long-term vision, and maybe they figured they didn't want to wait 10 years, so they found something shinier to chase.”
Jamie Price, a member of the E.F. Hutton board, who is still working to launch the brand in both Canada and the United States, agrees that for Mr. Campanale, “clearly time and speed to market was important to him, but it's a lot more important that we launch this thing in the right way.”
Regarding Mr. Campanale's departure to what could ultimately become a direct competitor, Dan Geraci, founder and co-chief executive of E.F. Hutton Canada, said that it isn't being taken personally.
“We all came into this as old friends who grew up together at E.F. Hutton, and we remain good friends,” Mr. Gareci said. “It's a big marketplace, and there's lots of room for all of us.”
Meanwhile, there is that “shinier thing” in the form of the new Lebenthal division, Lebenthal Wealth Advisors LLC, which comes with an existing financial services industry footprint and its own rich history.
Lebenthal Holdings is a boutique investment bank specializing in debt and equity capital markets.
The advisory firm affiliate moves the brand deeper into the asset management and financial advice categories.
“Lebenthal continues to grow the scope of its asset management and broker-dealer activities, and this venture not only complements our existing platform but will position us for future growth as we take advantage of opportunities in the evolving financial services landscape,” said Alexandra Lebenthal, chief executive and president of Lebenthal Holdings, and granddaughter of the company founder.
The wealth advisory division, which will seek to attract independent advisers, will “leverage our successful brand, proven capital markets and asset management expertise while forging a new model for entrepreneurial financial advisers,” she said.
Ms. Lebenthal, who is hopeful that the business can grow to $20 billion under management over the next five years, said that the effort to launch the wealth advisory unit has been in the works since mid-July.
With the launch of the new firm, Mr. Lane will be chairman of Lebenthal Holdings, and Mr. Campanale will be chairman and chief executive of Lebenthal Wealth Advisors.
Mr. Grillo, a former regional director at Smith Barney, will be president of Lebenthal Wealth Advisors.
Mr. Lane's background includes working as chief executive of Bear Stearns Asset Management, chairman and chief executive of Neuberger Berman Inc., and a vice chairman of Lehman Brothers Holdings Inc.
Mr. Campanale has been a president and chief executive of Smith Barney Consulting Group, where he was responsible for the investment management consulting business.
“Our goal is simple,” Mr. Lane said. “We want to attract the best independent registered investment advisers and entrepreneurial wealth managers from across the nation by providing them with a culture that empowers them to deliver the best service and unconflicted advice to their clients.”
In some respects, there are parallels between the efforts to revive the E.F. Hutton brand and the history of Lebenthal Holdings.
In 1987, Shearson Lehman/American Express acquired E.F. Hutton — which two years earlier had been rocked by a scandal involving check overdrafting — for $1 billion.
The Hutton brand was dropped by Amex in 1990, when it changed the name of its Shearson Lehman Hutton brokerage to Shearson.
The Lebenthal brand has also gone through a metamorphosis.
The Lebenthal firm was sold in 2001 for $25 million to MONY Group Inc., and thus joined its Advest Group Inc. brokerage unit.
In 2004, financial giant Axa SA acquired MONY, and in 2005 Axa sold Advest, including Lebenthal, to Merrill Lynch.
Merrill didn't use the Lebenthal brand, which was sold back to the Lebenthal family in 2007 for $1,000.