Brooke’s Note: What says everything about what the Robertson Stephens brand once meant was that when I moved to San Francisco I was told where the young “Robbie” guns had drinks on Friday after work. It was suggested maybe I go there to tap into the pulse of business activity in the city and region. But the brand will impress me even more if it can pull a Lazarus-like rise from what sure had the appearance of dead as captured by a 2002 The Economist article: Boom, Fizzle, Silence. If anyone can turn fizzle to sizzle, it’s someone like Joe Piazza. He believes.
The once-great underdog investment banking brand of Robertson Stephens is getting another shot at life after one of its former executives bought it and set up an RIA and broker-dealer under the name.
Joe Piazza has rented 8,000 square feet on the Bank of America building’s 16th floor at 555 California St. in San Francisco on behalf of his new venture, Robertson Stephens Asset Management, and its sister broker-dealer, Robertson Stephens Securities.
The chairman, chief executive and founder of the new venture plans to get some of his old “Robbie” Stephens band back together and pick up on success that Robertson Stephens had as a rising wealth manager just as the investment banking side of the business went poof. Piazza has received one round of financing — largely from his former colleagues at the legendary firm. Expect announcements on hires in the spring and summer, he says.
Excuse the interruption
Also taking a minority interest is LPL Financial LLC, which will play a role as financial backer while providing a wide range of infrastructure including not only LPL’s hybrid platform but also its Fortigent reporting capabilities, In that sense, the LPL-to-Robertson Stephens relationship is a demonstration project of sorts for LPL, a rising asset custodian, although The Boston-, Charlotte- and San Diego-based independent broker-dealer has offered financial assistance to other firms in the past. See: LPL Financial finds a starting place to bring Fortigent into its mainstream mix.
“This is a true startup,” LPL president Robert Moore said from the firm’s Master’s Top 10 conference of its top 800 advisors in Scottsdale, Ariz.. “Having us in as an investing partner is a vote of confidence.” He added that LPL’s plan contemplates that future rounds of financing will dilute its interest. “We’re not seeking some inordinate return,” Moore added.
In a letter sent out to former business colleagues and other business acquaintances, Piazza wrote:
“As many of you know, I have always felt that I was “interrupted” 10 years ago while still in the early stages of building a wealth management business at Robertson Stephens (founded in 1998). Many of my former colleagues in [the financial services division and throughout Robertson), have often encouraged me to think about restarting that business. While I have been tempted over the years, the timing never seemed right.”
Man with a plan
Observers wonder if in fact the timing is good, because the brand is old and many of the old all-stars of the firm are happily ensconced in new ventures — or retired.
But Piazza says that market conditions are right-on now with the decline of wirehouses and that — if history is a guide — Robertson Stephens can attract assets in dizzying fashion. Asked how he could accomplish this kind of asset gathering without the help of a pipeline of referrals from the investment bank itself, Piazza says he has a plan. Despite having internally sourced about 50% of the $40 billion gathered last time, he is working the circuit of smaller investment banks that have sprung up and pitched them that they can talk the language of new wealth from entrepreneurs fresh out of buyouts and IPOs.
“We look like each other. A lot of us know each other. [These investment bankers] are happy to [make referrals].”
In his letter, he points out that from a virtual standing start in 1998, the old Robbie Stephens’ wealth management business grew to $40 billion in assets and $240 million in revenues by the end of 2001.
“At the end of the first quarter of 2002, and just before Fleet Bank announced our sale, revenues hit an annual run rate of $320 million — almost two years into the dot-com bust. See: Why the San Francisco Bay area is almost certainly the capital of the RIA business.
Prime intellectual property
In an interview today, Piazza said: “It was painful. We were interrupted. We were profitable down to the last days.”
He was able to reclaim the brand because Bank of America, its former owner, had let it go. Piazza quips that the fees of the intellectual property lawyers were higher than the amount he paid to procure it.
Piazza has already succeeded in building a team of administrative and support personnel that he has recruited exclusively from the old pool of Robbie Stephens talent. Some of them have not yet fully left their jobs, so Piazza is holding off in providing their names, he said in an interview.
One observer likened Piazza’s business plan to that of HighTower Advisors because the strategy is to attract people serving high-net-worth investors with recruiting packages that include equity and pay — and an office. It also calls to mind Frank Campanale’s effort to revive his alma mater, E.F. Hutton, under that famous brand. See: Frank Campanale’s E.F. Hutton reboot starts to take shape as ex-Hutton executives sign on.
“In effect, we are going 'back to the future’ to build a firm with a partnership culture similar to the firms mentioned above,” Piazza writes. “We will also recognize the realities of today’s market and offer advisors an attractive financial recruiting package to join our firm, including meaningful ownership of Robertson Stephens LLC.”
Different direction this time
One way that the new Robbie Stephens would be well-served not going back is to be a narrowly focused boutique relying on a slim vertical-like technology, says Timothy Welsh, principal of Larkspur, Calif.-based Nexus Strategy LLC. He believes that narrow reliance sowed the seeds of extinction the last time around. “Your industry will go out of style,” he says.
To pull off the relaunch of Robertson Stephens, Piazza expects to lean heavily on LPL Financial’s technology and “infrastructure” but it will also depend on the firm for transition support for advisor hires. This arrangement sounds similar to other such ventures, known as offices of supervisory jurisdiction, in which LPL is participating in around the country. One such new arrangement is with Washington Wealth Management LLC. See: Seeing a clear path to $3 billion, Washington Wealth hitches its venture to LPL but quietly adds Schwab.
Welsh adds that the high-net-worth focus, coupled with a charismatic figure and brand under the LPL umbrella also sounds like Ron Carson’s new venture. See: Ron Carson launches roll-up/TAMP-like venture with Envestnet, TD Ameritrade and Advizent as puzzle pieces.
Piazza plans to use LPL-owned Fortigent LLC’s capabilities, such as asset allocation modeling, portfolio construction, manager due diligence and selection and consolidated reporting, to build its investments platform. See: How Fortigent got $50 billion on its platform by treating an RIA pain-point.
The original Robertson Stephens died in July 2002 after its parent, FleetBoston closed it simultaneous with the collapse of the technology bubble. In its heyday, the investment bank managed the initial public offerings of prominent technology companies such as E*Trade and Mapquest — and underwrote 74 IPOs in all with combined value of $5.5 billion.
Bank of America bought Robertson Stephens in 1997 for $540 million and operarted it for 11 months before merging with NationsBank, which owned San Francisco-based rival, Montgomery Securities. To alleviate the redundancy, Robertson Stephens was offloaded to BankBoston Corp. in 1998 for $800 million. Robertson Stephens became part of FleetBoston Financial Corp. following the 1999 merger between its new parent and Providence, R.I.-based Fleet Financial Group Inc.. Fleet and the new Bank of America Corp. merged in 2004.
Robertson Stephens was known as one of the “Four Horsemen” of tech deal-makers that also included: Hambrecht & Quist, Montgomery Securities and Alex. Brown.
Before joining Robertson, Piazza was a managing director at Furman Selz in New York, where founded and managed the private-asset- management department, according to biographical information on him from Wellford Energy Group LLC, which he founded and served as managing director until last year..
Following Furman’s acquisition by ING Groep NV, Piazza assumed a senior position in the latter’s global private bank.
Prior to joining Furman Selz, he was a partner of Montgomery Securities, where he founded the private-client business.
Back to where it began
Piazza was a senior executive in research and capital markets for 20 years, beginning in 1970. During that period, he was the head of the equity division of Dillon Read. where he managed the firm’s research, trading and sales departments. He also served on Dillon’s board of directors.
Piazza also was head of equity institutional sales at Donaldson Lufkin Jenrette & Co. Inc. and served on its board of directors.
Before joining DLJ, and prior to his management roles, he was a vice president in institutional sales and trading at Goldman Sachs & Co. Inc.. One of his duties was on-campus recruiting and new associate training.
Piazza says that he came to San Francisco 20 years ago in search of the partnership atmosphere he had enjoyed in his early days in New York. He says this big move is being motivated by a similar calling — but that he’s not thinking small.
“This is not going to be a small RIA,” Piazza says. “We have no intention of being regional.”
But the old San Francisco stomping grounds is a good place to start. See: Why the San Francisco Bay area is almost certainly the capitol of the RIA business.