Lebenthal Holdings is closing its small wealth management division, which opened its doors at the start of 2014 but failed to gain traction in the shifting wealth management marketplace.
At its peak, Lebenthal Wealth Advisors had five teams of advisers and close to $950 million in assets under management, said Alexandra Lebenthal, CEO of Lebenthal Holdings. A team with $750 million in client assets
left in June.
As of Thursday afternoon, when Ms. Lebenthal told employees the unit was shutting down, two teams of advisers remained.
Just two years ago, the firm was expanding at a good clip and projected
it would have assets of $5 billion by the end of 2014. But the firm has been plagued by steady turnover, including Frank L. Campanale, chairman and chief executive of Lebenthal's wealth unit, who left last year.
The closing of Lebenthal Wealth Advisors comes at a time when common wisdom in the securities industry is that small and mid-sized firms are facing extinction-like pressures. Rising compliance costs and creating a distinct profile in a crowded market are two such burdens. 'Gain scale or go home' is a common refrain among industry professionals.
In an interview, Ms. Lebenthal said the cost of compliance was a constant for any firm. And the company would increase its focus on its two remaining businesses: asset management and underwriting equity and corporate debt.
Wealth management is “a competitive business, and sometimes as an entrepreneur you make decisions to try things, and when it's clear they don't work out you have to make the decision to pivot and move on,” Ms. Lebenthal said. “That's what we've decided to do.
“It was clear this wasn't a business we were excelling at, and we like to be really good in the businesses we are involved with,” she said. The firm is seeing more success in recruiting teams of assets managers than advisers, she said.
The parent company, Lebenthal Holdings, founded in 1925, is a boutique investment bank specializing in debt and equity capital markets. In 2001, it was sold for $25 million to The MONY Group Inc. and joined its Advest brokerage unit. In 2004, financial giant Axa SA acquired MONY, and in 2005 sold The Advest Group Inc., including Lebenthal, to Merrill Lynch & Co. Inc. Merrill didn't use the Lebenthal brand, which was sold back to the Lebenthal family in 2007 for $1,000.
