Every morning on the 32nd floor of a Chicago office tower, brokers at William Blair & Co. assemble to hear Blair analysts discuss the companies and sectors they follow. This in itself isn't unique — brokers around the world gather by squawk boxes every morning. What's different about the brokers at William Blair is they can then go back to their offices and trade on their clients' behalf based, in part, on what they just learned. That's right: Blair brokers still trade, often on a discretionary basis, for their clients.
Most firms are cajoling their rank-and-file brokers into an asset-gathering, fee-based model in which the actual money management is outsourced. But Blair (and a few other firms, such as Bear Stearns; see cover story, page 34) allows its brokers to decide how they run their own businesses. So reps at William Blair are free to pursue their own strategies. And most advisors manage their clients money by putting them into individual securities based on the firm's own investment research, which favors growth and tends toward small- and mid-cap securities. (About 12 percent of the assets are in a fee-based program.) For younger brokers, there are model portfolios to follow based on proprietary research.
The freedom of choice may be because Blair, established in 1935, is still independent and employee-owned (30 percent of Blair brokers are principals). Even though it resembles other Wall Street institutions (Blair offers everything from investment banking and bond underwriting to mutual funds and private equity), the firm doesn't mind going its own way strategically.
“We're distinctive, we offer more autonomy,” says Carlette McMullan, a rep and the manager of the firm's private investor unit. “Here you are not forced to push product.”
Blair — with offices in selected U.S. cities and in London, Tokyo, Zurich and Liechtenstein — employs about 70 registered reps, all of whom may call upon their in-house analysts for input on equities they cover. With more than $7 billion in private client assets and 25,000 client accounts, each broker manages an average $90 million client assets. It employs 25 research analysts who cover 270 companies, mostly small- to mid-cap growth companies.
“When clients ask, ‘Who is managing my money?’ We say, ‘Well, we are.’ There's trust,” says McMullan.