Smith Barney may disappear the old-fashioned way

Like E.F. Hutton, PaineWebber and Dean Witter, the venerable name of Smith Barney is likely to be relegated to the ash heap of Wall Street history. This month, Dow Jones Newswires reported that Morgan Stanley Smith Barney LLC — the nation's largest brokerage firm — is canvassing clients on potential new names for the firm, none of which includes Smith or Barney. The firm had no comment on the story. Although some marketing experts said they expected that the two-year-old Morgan Stanley-Citigroup Inc. joint venture would have retained the Smith Barney name for a while longer, they also said the decision is inevitable. “Morgan Stanley Smith Barney is a mouthful, and it reeks of a transitional name,” said Geraldine Leder, president of LederMark Communications LLC and the former marketing chief of Legg Mason Inc. “It's not surprising that they want to settle on a single name.” In one sense, a new name would signal the completion of the integration of the firms' branch-office networks and their 18,000-plus adviser force. For the legacy Smith Barney advisers, it also would be a sign that despite their numerical advantage, the Morgan Stanley side “won.” “It's a psychological thing. When you don't see your firm's name up there, it's just another reminder that you don't work there anymore,” said Alois Pirker, an analyst with consultant Aite Group LLC. In Wall Street terms, the Smith Barney name has survived longer than most. Formed in 1938 as a result of the merger of the long-established Charles D. Barney & Co. and Edward B. Smith & Co., the firm became Smith Barney Harris Upham & Co. Inc. in 1975 and then was subsumed in the ever-changing corporate empire of Sanford Weill. But Smith Barney, in some form, remained. Some consultants suggest that Morgan Stanley figure out how to maintain the brand and profit from one of the most recognized names on Wall Street. “Why throw away something you've paid a lot of money for?” asked Jim Gregory, chief executive of brand consultant CoreBrand LLC. “I understand the desire to streamline the image, but there's value in this brand and they should determine how to take advantage of it.” Of course, the value of investment banking names isn't what it used to be. If Smith Barney ever “uhhhned” money the old-fashioned way, as its late spokesman actor John Housman once intoned in the firm's TV commercials, the financial crisis dispelled the notion of Wall Street probity in the minds of many investors. In the wake of the crisis, acquirers of failed firms were quick to jettison the soiled brands. Sign painters and stonemasons quickly eradicated any vestige of Bear Stearns from the Manhattan skyscraper JPMorgan Chase & Co. acquired when it took over the firm. Barclays Bank PLC didn't even bother to acquire the Lehman Brothers name when it purchased much of the assets of the defunct bond giant. The truth, said Julian Dailly, director of brand valuations at consultant Interbrand, is that as recognizable as some of the financial services brands are in the public's mind, they aren't very powerful in terms of affecting customer behavior. “From a superficial marketing point of view, a brand still has value because there is market awareness of it. And you could argue that businesses make bad decisions and leave money on the table when they kill a brand. For products like perfume and cigarettes and apparel, brands are very important. In financial services, however, the importance of branding on customer behavior is less. All things being equal, changing the name of a financial services company has less of a consequence than most other industries,” he said. There are possible niches where the Smith Barney brand still could prove valuable, Mr. Dailly suggested. But the cost of sustaining it, and the confusion that it could create in consumers' minds regarding the firm as a whole, may not be worth the effort, he said. “There's certainly a part of the buying population that is probably nostalgic for the Smith Barney brand. They could consider packaging products or services for those people, but the question becomes whether there are enough of them and whether the name would create confusion in the market,” Mr. Dailly said.

LEBENTHAL HAS VALUE

Alexandra Lebenthal thinks that some old names do have value. The granddaughter of Louis and Sayra Lebenthal, who founded Lebenthal & Co. LLC in 1925, Ms. Lebenthal is the daughter of Jim Lebenthal, whose TV commercials for the firm in the 1970s and 1980s made it synonymous with the underwriting and distribution of municipal bonds for generations of New Yorkers. But in 2005, after Merrill Lynch & Co. Inc. bought Advest Inc., which had acquired Lebenthal in 2001, the brand ceased to exist. In 2007, Ms. Lebenthal bought back the rights to her family name and re-established a muni bond business under the Lebenthal brand as part of her multifamily-office firm, Alexandra & James LLC. “You can't ever consider a brand name dead, because they evoke memories for people and they still resonate,” she said. Ms. Leder has a different take. “It's hard to get sentimental about old brands,” she said. “So many once-great names have already gone by the wayside.” E-mail Andrew Osterland at aosterland@investmentnews.com.