Wall Street offers a virtually unlimited smorgasbord of investment products and services.
Andrew Crowell's strategy for competing: Stick with meat and potatoes, forget the rest.
Crowell heads Los Angeles-based Crowell, Weedon & Co., a brokerage that prides itself on being a throwback to a less complicated time. Its brokers are old-fashioned stock and bond pickers in an industry that increasingly is turning its back on simple investing concepts in favor of the newest hedge fund, commodity future or algorithmic trading program.
Crowell, 42, is trying to sustain the basic business strategy of his grandfather, Warren, who co-founded the brokerage in the depths of the Depression, and of his father, Don, who was at the helm for more than 30 years, until his death in 2004.
Buy high-quality investments and hold on to them, the elder Crowells preached. Build a diversified portfolio. And don't try to time the markets' swings, because you won't get them right.
Andrew Crowell recalls one of his father's favorite sayings: "Money is like a bar of soap: The more you handle it, the smaller it gets."
That message attracted enough clients over the decades to keep Crowell Weedon consistently profitable for 75 years, the firm says. The question is whether it's enough of a hook to fuel the brokerage's growth in the future, as older clients pass away and their heirs are tempted by Wall Street investment pitches touting the latest hot product.
Crowell acknowledges that the firm, which has 11 retail offices, mostly in L.A. and Orange counties, and holds $8.4 billion in client assets, faces a challenge attracting younger customers. Some, he says, "are coming to us thinking, 'Online brokerage.' They're used to talking to a website, not an individual."
He's banking on the idea of personal service from a financial advisor ultimately winning over even Web-savvy investors. "We still think that picking investments is a full-time job," he says.
Another issue is some investors' resistance to the idea of paying commissions on purchases and sales, as opposed to an annual fee that is a percentage of assets under management. The commission model still is preferred by most Crowell Weedon brokers.
Which approach is best for a client may depend on how active the account is over time. But one argument against commissions is that they can spur brokers to trade frequently, which may not be in a customer's best interest.
Last week, Crowell Weedon suffered a black eye when the New York Stock Exchange censured the brokerage and fined it $225,000 for a number of infractions since 2000. The most serious was that the company, like many of its peers, rewarded brokers more for selling certain mutual funds than others from 2000 to 2003, without disclosing those incentives to customers.
Crowell Weedon and other firms ended the commission incentives in 2003 and 2004. Andrew Crowell doesn't defend the practice. "It's an embarrassment," he says.
A Stanford University graduate in economics who did post-graduate work at the London School of Economics and Political Science in 1988, Crowell has a low-key demeanor that fits the firm's historically staid image.
Yet while growing up in San Marino and then at Stanford, Crowell didn't aspire to follow his father. He considered teaching or the ministry, he says. "I was never convinced that this was a business I was cut out for."
Even after his post-graduate stint in London, he opted not to join the brokerage when he returned to Los Angeles. Instead, he took a job at Russ Reid Co., a Pasadena marketing firm that served not-for-profit organizations. He stayed seven years.
The people side of business always appealed to him more than the financial side, Crowell says. His father helped persuade him to give the brokerage a shot in 1995. The elder Crowell told him: "This whole business is about people."
Andrew Crowell began working in the firm's operations department, learning the mechanics of the company. He also started building his own roster of clients, working side-by-side with his father.
After Don Crowell died in June 2004, Andrew, then chief operating officer, took the brokerage's helm.
"He has the charisma to get the best out of people," says Lynn Reitnouer, 74, who has been at Crowell Weedon since 1964 and is one of 69 partners.
Now, Crowell has the firm expanding faster than it has in decades.
Crowell Weedon opened an office in La Jolla in 2005 and last year bought the retail business of Seidler Cos., a small, L.A.-based brokerage. That deal added offices in Fresno and Irvine and brought 35 brokers to the firm, boosting its total to nearly 170.
Crowell says the brokerage, which now has nearly 39,000 customer accounts, has ample expansion opportunities in Southern California and could easily double the number of brokers it has in the region.