Reimagining Bank Brokerage
How an overlooked category position helped turn Legg Mason's biggest money loser into one of its most profitable operations—then powered another era of growth at Raymond James.
1,100% revenue growth in 4½ years at Legg Mason. Then, approximately $50 million to more than $400 million in annual gross fee revenue at Raymond James.
The situation
In the mid-1990s, Legg Mason's Financial Institutions Division faced a difficult starting point. It had entered bank brokerage later than its competitors, had lost an extraordinary amount of money and had become one of the company's biggest money losers before the division was reassigned to my next door neighbor to head..
The obvious assignment might have been to create better advertising for another bank brokerage program.
But the larger opportunity was to redefine the battlefield, change the way the battle was fought and in the chaos, win the war.
What the market had accepted
Changes in banking law initiated by the country’s largest brokerage firms allowed them to offer banking services. The pitch? Depositors could make upwards of 20% annual returns and still write checks on the money.
Bank trust departments began hemorraging cash as their depositors transfered funds to the brokerage houses in record amounts as banks scrambled to find a way to compete.
Some small, maverick firms emerged to offer bank brokerage programs. Their offerings were a shadow of what firms like Merrill Lynch or Goldman Sachs offered. But, they gave banks what they wanted - a “safe” program, not too risky, that didn’t conflict with the banking culture — and just enough appearance to keep less-sophisticated investors and their deposits inside the bank.
Every wirehouse brokerage firm and sophisticated investor knew “bank brokerage” was to “real brokerage” as an urgent care facility was to the Mayo Clinic.
I determined the category itself was the problem. So, while Legg Mason may have been the last entrant into the bank market, the strategy I developed the strategy changed the battlefield.
The larger opportunity
I repositioned the Legg Mason bank brokerage division around a simple market-defining idea:
“Not Bank Brokerage. Real Brokerage for Banks.”
This did more than improve the message. I made certain Legg Mason could not be considered in the “bank brokerage” category at all. It was the market leader of a brand new category - “Real Brokerage For Banks.”
This changed the mental framework on which banks would evaluate all the providers in the future.
Architecting the strategy
I made sure the concept was carried through every touchpoint:.
Since 90% of banks that visited their Baltimore headquarters were so overwhelmed that they signed on immediately, I determined to bring Baltimore to banks on the first sales call. We created a capabilities brochure so striking that prospective banks instantly saw the difference - drastically shortening the sales cycle.
Annual symposiums held in Baltimore put on the ritz for all the advisors from participating bank programs, where they experienced sophistication, resources and people genuinely equal to the largest wirehouse brokerage firms in the nation. Word-of-mouth spread.
The elaborate marketing materials for the symposiums also created continuous proof their salespeople could take into the market: visible evidence that Legg Mason delievered an entirely different caliber of investment program for banks.
We also developed the most glorious marketing program for the banks - fully customized materials with each bank's advisors, buildings and identity. These showcased the bank’s investment program to depositors - in a way that only a "real brokerage firm could do. This was offered to banks at roughly one-tenth the cost of what individual banks would have spent to create comparable materials themselves.
The marketing program had a secondary and much more strategic objective. Since the people most connected to the area’s high net worth individuals was the bank’s board of directors, we strategically designed the marketing campaign specifically to excite bank management who would take it to the bank’s board of directors with genuine enthusiasm. That enthusiasm caused bank board members to instantly recognize the bank’s ability to better serve the high net worth community and to actively recommend that they bring their investments to the bank.
Each element reinforced the same strategic truth—to help Legg Mason win the marketing battle.
The Legg Mason result
Over four and a half years, the Financial Institutions Division achieved approximately 1,100% revenue growth.
What had once been Legg Mason's biggest money loser became, if treated as a branch, its third-most-profitable branch.
The Raymond James chapter
When Legg Mason later divested the division to Raymond James, its president moved with the operation—and I replicated the strategy there.
Raymond James already possessed authentic full-service brokerage capabilities. But, it had not claimed the mental territory of real brokerage for banks as the idea around which the market organized.
So, we moved the positioning, marketing architecture and growth system to Raymond James. With greater resources, we created even more of what we began at Legg Mason. Before the division president retired, annual fee revenue grew from approximately $50 million to more than $400 million.
These were two distinct chapters: 1,100% growth at Legg Mason, followed by the $50-million-to-more-than-$400-million expansion at Raymond James.
The principle
The breakthrough did not come from competing through conventional channels or by creating better marketing. We changed the battle by creating a new reality in the market, then dominating the new category we created with proof so compelling, it couldn’t be refuted..
What opportunity might your business be overlooking?
The most consequential growth opportunity may not be another improvement to the campaign, message, offer or channel already in front of you. It may be a larger opportunity—and a point of leverage no one has recognized yet.