Arthur Grant is used to making his own way in the world and calling his own shots.
In a move the independent broker-dealer market has been anticipating for years, Mr. Grant, 75,
last month agreed to sell the IBD he founded 33 years ago, Cadaret Grant, to private-equity-backed Atria Wealth Solutions.
"I left home at 16, managed to graduate high school while I slept in my own car," he said in a recent interview. He then joined the Navy in the early 1960s and, with the help of a family friend, landed a job in supervision at the New York Stock Exchange in 1966.
"I started from that," Mr. Grant said. "I'm such a lucky guy."
After leaving the Big Board and cutting his teeth at a couple of large and growing firms, he started his own broker-dealer, Cadaret Grant & Co. of Syracuse, N.Y., in 1985, right at the time when financial planning concepts were beginning to seep into the brokerage business. Until then, broker-dealers were homes to registered reps who pushed stocks or mutual funds and reaped heady commissions.
That started to change in the 1980s. "There were all kinds of financial people who had taken a narrow channel — accountants, stock brokers, life insurance salesman — but financial planning pulled it all together," Mr. Grant said.
Planning is also essential for the continued success of a brokerage firm, so many of which crash and burn, he said. "The history of Wall Street is that firms don't have longevity, but if you get good leadership, you have a better shot at being durable."
Mr. Grant is staying on at Cadaret Grant in an advisory role. "I'm making a bet the management of Atria will take this firm into the future, make it better, focus on the firm's strengths like culture, policy and employees and not turn it upside down," he said.
"That's why I'm selling now because I found the people," he said, noting that the CEO of Atria, Doug Ketterer, is in his early 50s and is a veteran of Morgan Stanley. "It's their future."
Terms of the purchase were not disclosed.
"Art has always been a guy I liked a lot and respect," said Joseph Deitch, chairman and majority owner of Commonwealth Financial Network and a contemporary of Mr. Grant. "His firm was his home and home for everyone affiliated with it. I'm not sure I ever met anyone with a bad word to say about him."
In 2017, Cadaret Grant had $158.5 million in total revenue, ranking it the 32nd largest IBD in the industry, according to
InvestmentNews data.
Sitting on plenty of capital, private equity-backed firms like Atria are currently on the prowl to buy broker-dealers and RIAs. But the business is increasingly difficult for individual business owners.
Indeed, Mr. Grant is part of a passing breed in the brokerage industry — a thriving B-D owned and operated by one person or a small group of partners. His peers include Mr. Deitch and Eric Schwartz, who started their firms, respectively, Commonwealth Financial Network and Cambridge Investment Research Inc., around the same time as Mr. Grant.
Rising compliance, legal and technology costs have pushed many of Mr. Grant's peers out of the business in the past 10 to 15 years, and the number of broker-dealers registered with the Financial Industry Regulatory Authority Inc. continues to decline.
"We came up at a time when the requirements were a lot less rigorous to start a broker-dealer," said Mr. Deitch. "The regulatory requirements today are vastly different and more serious. Our firms were started with literally a handful of people. I literally do not know how smaller firms can keep up with the requirements of the regulators as well as the demands of clients."
Along with running his own firm, Mr. Grant has served on a variety of industry groups and committees, including leading the NASD district committee for Boston and serving on the board of the old Securities Industry Association, the forerunner to the Securities Industry and Financial Markets Association. Two of his three daughters have worked at Cadaret Grant.
The dot.com blowup of 2000 and the market collapse eight years later due to the mortgage crisis did not damage the firm, he said.
"Those events slowed things down, but we do business when people have money to invest," he said. "The advisers who are affiliated with us want to do the right thing with clients. They're not trading stocks and building positions. They're helping people and don't think of themselves as titans of Wall Street."
Mr. Grant's honesty and candor have earned the respect of his peers, and he has publicly and privately railed against securities regulators, essentially making the argument that they have too much power.
In an interview with InvestmentNews in 2005, he argued that securities regulators were trying to undermine the free market. "I think that's No. 1," he said at the time.
Now, he's more circumspect in his comments about the government watchdogs of the securities industry. He declined to comment when asked about the power the regulators currently wield in the securities industry.
Regardless, he remains positive about the future.
"In the '80s, we initially started with four or five advisers, just to get it started," he said. "We've been lucky in Syracuse and hired people who were sincere and dedicated. It's the kind of town that breeds those kinds of people."
"Now, the firm has around 120 employees, some who started in 1985 are still with us," he said. "It's for people like them that we are planning the future of Cadaret Grant."
