Joe Grano, former chairman and chief executive of UBS Financial Services Inc. and its PaineWebber predecessor, is weighing a return to retail brokerage.
“My phones have been ringing off the hook, and I think it's still a terrific business,” he said about calls that he has been receiving from financial advisers and executives with whom he worked at UBS and at Merrill Lynch & Co. Inc., where he was national sales director before joining PaineWebber in 1998.
Mr. Grano, 62, who runs the private investment firm Centurion Holdings LLC, said in an interview that he expects to make a decision this summer during a vacation in Italy.
“If I were to do something, it would be a boutique with high-end producers,” he said.
If Mr. Grano returns to the retail world, he would join a posse of former Wall Street executives who still see gold in the business and think that they can differentiate themselves from the wirehouses and brokerage stalwarts where they made their fortunes.
Donald Marron, who was chairman and chief executive of UBS PaineWebber and Mr. Grano's boss, recently bought three of the independent-broker-dealer businesses owned by ING Groep NV.
Philip Purcell, the former chief executive at Morgan Stanley, and David Pottruck, the former chief executive of The
Charles Schwab Corp., are investors in HighTower Advisors LLC, which has been recruiting brokers nationwide to set up “independent” practices.
Unlike some of his cohorts, Mr. Grano said he isn't interested in a registered investment advisory or independent-contractor model, which can put advisers at risk if they make errors because of lower levels of capital to support them. But he expressed confidence in his ability to recruit top advisers and managers from brokerages that have lost their brand value and been neglected by their revamped parents in the aftermath of the 2008 banking crisis.
“All the major brokerage-owning banks have lost their luster due to [credit] concentration, overleverage and dumb management,” Mr. Grano said. “I just don't like what I see with the disconnect between management and the [financial advisers].”
The million-dollar producers he envisions recruiting would be eager to work in an environment where “giving advice and counsel to fellow human beings” were at the heart of the firm's philosophy and where they would sit next to like-minded professionals, Mr. Grano said.
Mr. Grano, who is a producer of the Broadway hit musical “Jersey Boys,” said that if he moves ahead with his plans, he will likely offer equity to advisers but won't join high-stakes recruiting wars that offer brokers two to three times the revenue that they produced the previous year. Brokers who accept such payments should be required to disclose them to prospects they solicit from their former firms, he said.
The outspoken executive, who last year sent an unanswered letter to UBS AG's Swiss management suggesting that it restore the PaineWebber name to its U.S. operations, said that he is conflicted about his plans.
“A side of me truly misses it,” Mr. Grano said of running a retail-brokerage firm. Weighing against a return is the lifestyle change that would require him to “be living out of a suitcase” as he organized a new company.
Mr. Grano denied a rumor that he is considering collaborating with Kenneth Langone, a former New York Stock Exchange board member and a founder of Home Depot Inc., on a new venture. However, he said that he would welcome working with former NYSE chairman and chief executive Richard Grasso.
“I don't know if he is ready to get back in the saddle again, but he would be a value-add,” Mr. Grano said.
Mr. Langone and Mr. Grasso, who are actively involved in Italian-American and other civic and Wall Street organizations with Mr. Grano, didn't respond to requests for comment.
The road to success in the retail-advice business, to be sure, isn't guaranteed. At least five independent broker-dealers have closed their doors this year because of capital problems, fraud or other issues, and the number of brokerages registered with the Financial Industry Regulatory Authority Inc. has declined by 8% since 2005 (see story on Page 8).
Some of the so-called consolidator firms that have been building networks of fee-based RIA firms also have stumbled. For example, WealthTrust LLC, a Nashville, Tenn.-based consolidator with interests in 10 RIAs that oversee about $6 billion in client assets, reshuffled its management two weeks ago after failing to raise capital to meet impending debt obligations, according to several sources (
InvestmentNews, May 24).
The company has hired Houlihan Lokey Howard & Zukin to advise it. James Murray, a Houlihan banker, said that WealthTrust isn't for sale.
E-mail Jed Horowitz at [email protected].
