Brown Advisory in Fells Point turned 20 this year. The firm now manages about $42 billion in assets and recently expanded its business in the United Kingdom.
CEO Michael Hankin reflected on the firm's founding and its growth, as well as his efforts to clean up the Inner Harbor waters.
Brown Advisory opened a London office in 2008, largely serving institutional clients. You've recently expanded your business, focusing on expatriates in the United Kingdom. Can you elaborate on what you're doing there and why this new focus?
We have been impressed with the interest of non-U.S. investors in U.S. equities. We believe that this is a recognition that the U.S. still provides the best environment for building successful businesses. For us, this trend has meant that in just five years, our assets from non-U.S. clients have grown to more than 10 percent of our total client assets. That figure includes non-U.S. banks and insurance clients who offer our equity strategies with their private clients. Hence, we see the step of building a business that offers our investment strategies directly to private clients as a natural one. We also find that working with private clients and institutional clients is quite complementary. Our experience of working directly with private clients is reassuring to our institutional clients who must ultimately serve their direct clients. And the performance requirements of our institutional clients is an important confirmation of being results-oriented to our private clients.
Brown Advisory is 20 years old this year. What do you see for the company in another 20 years?
This year has been a sentimental one for many of us at Brown Advisory who were there at the firm's genesis as part of Alex. Brown in 1993 and took the important step of going private in 1998. We sincerely believe that it has been our sole focus of serving clients that has led to our growth and we are now privileged to advise on approximately $42 billion in client assets. We have never expressed our goals in terms of our own growth. Our annual planning process that will begin shortly for 2014 requires us to look closely at what we must deliver to clients — performance, advice and service — and where we need to invest our earnings back in the business to do a better job in doing so. In turn, we hope that this focus will lead to steady growth as a business over the next 20 years because we know that such growth is important to our clients, our colleagues and, ultimately, our shareholders. One thing we know for sure, however, is that we will continue being an independent firm, owned primarily by our employees — every single full-time employee owns equity — and benefiting from a small group of outside shareholders who serve on our board or otherwise provide insight and guidance.
This fall is the five-year anniversary of the financial crisis. Have investors put that all behind them, or what repercussions of the crisis still affect investors today?
Most of us — those in the investment business as well as our clients — would confide in private that it is hard to believe that it has been five years since the financial crisis reached critical mass in the fall of 2008. Perhaps this is another way of saying that, while the markets have rebounded, we still carry some scars from the experience. You can see evidence of these scars in many clients' allocation of their financial assets; before we even begin to discuss asset allocation from an investment standpoint, we focus on making sure clients have sufficient liquidity to make it through another crisis. Then we can have a dialogue with our clients that governs how they will invest their investment assets for the long term. By and large, most of our clients carry much higher levels of cash and short-term bonds and are much more diversified than they were prior to 2008.
You are chairman of the Waterfront Partnership of Baltimore, which in 2010 set a goal of making the Inner Harbor swimmable and fishable within a decade. What further progress do you need to make on this project, and will you meet your deadline?
We set the goal of making the harbor "swimmable and fishable" by 2020 because it was time that we put our minds to it. We have been pleased to have Mayor Stephanie Rawlings-Blake as a partner in this effort as well. I recall that she put it best by saying, "every plan needs a deadline and 2020 is as good as any." In 2013, there is no reason that we should be seeing the levels of bacteria from sewage leaks, the volume of trash and the consequences of stormwater runoff that is found in the harbor. These problems are solvable. So the most important step that we as citizens need to take is to place the improvement of the harbor at the top of health concerns for Baltimore City. After all, while the goal is expressed in terms of the condition of the water in the harbor, ultimately the harbor is really a pretty accurate barometer of the condition of all of the rivers, streams and waterways located in the Baltimore area.
You live on a horse farm in Baltimore County. How did that come about?
We are incredibly fortunate to live on a farm in northern Baltimore County, an area which has benefited from strong land conservation efforts for over 50 years. Where else can you leave a beautiful rural area in the morning and travel just 35 minutes to an office overlooking the harbor in Fells Point? The farm has been the focal point of our steeplechase racing activities, and most importantly it has provided a wonderful place for my wife and me to raise our three children.
Title: President and CEO, Brown Advisory
Education: Emory University, B.A. and M.A. in political science, 1979; University of Virginia School of Law, J.D., 1982.