The recent acquisition of Peninsular Securities by the Robert W. Baird Co. was the culmination of more than 20 months of negotiations. Now nearly all of the Peninsular clients have gone along with the deal and transferred management of their stocks to Baird.
Baird announced in February that it had added Peninsular Securities to its organization, including the brokerage firm’s veteran financial advisor team of Donald G. Karpinski, Robert P. VanderWal and Timothy N. Boersma.
Peninsular Securities, one of the oldest stock brokerage firms in the Grand Rapids area, had almost 1,600 accounts, representing about 900 families, with total investments worth more than $350 million, according to executives who managed Peninsular.
“I don’t think we’ve had more than a handful” of clients who have not gone over to Baird as part of the acquisition, said Karpinski, who owned Peninsular Securities along with VanderWal.
Karpinski said clients have been very close to the six-person staff at Peninsular, noting that the firm has done little or no advertising over the years.
“All our customers have really been referrals, by one person to another, through the years, so there’s a very close relationship there. We’re a very conservative group,” said Karpinski.
Karpinsky said Peninsular Securities was “basically a cash basis” business, without the necessity of always “signing a whole bunch of contracts.” A client could decide during a phone call to have Peninsular buy a given stock for them that day. Then the client had three days to pay for the stock.
“I don’t think I can recall a single customer that has ever backed out of making their payment,” said Karpinski.
“We trust people and they trust us,” added VanderWal.
The three former Peninsular financial advisors, along with their three-person support staff, are still serving their long-time clients, only now it is through the Baird office at 333 Bridge St. SW in Grand Rapids.
While the Grand Rapids office was already Baird’s largest in Michigan, now it is larger still, with 41 associates, according to branch manager Rob Peel.
Baird has six private wealth management offices in Michigan. Peel said Baird has 66 private wealth management offices nationwide, and the expansion of the Grand Rapids wealth management office now makes it Baird’s fourth largest. Baird also offers public finance services in Michigan.
Baird is an employee-owned, international financial services firm established in 1919, with offices in the United States, Europe and Asia. It has more than 2,400 employees serving individual, corporate, institutional and municipal clients. Baird oversees and manages assets of more than $73 billion.
VanderWal, Karpinski and Boersma have a total of 125 years of combined financial services industry experience. VanderWal, 74, joined Peninsular Securities in 1959, while Karpinski and Boersma have been with the firm since 1982.
“We are thrilled to welcome Robert, Don, Tim and the entire group to Baird,” said Peel. “The team has earned the loyalty and trust of their clients by providing prudent financial advice and exceptional service, which is very compatible with Baird’s client-focused culture.”
Founded in 1935 at the height of the Great Depression under the original name of Hudson White & Co., Peninsular Securities is believed to be the oldest locally owned brokerage firm in the Grand Rapids area, according to information provided by Baird.
“We built our business on the principle of putting our clients’ interests first and taking a conservative approach to meeting their investment needs, primarily by investing in individual stocks and companies with a proven track record,” Karpinski said.
When asked if either he or VanderWal is contemplating retirement, Karpinski, who is 75, replied, “We are going to be around here for awhile.”
However, he did say that “the whole purpose of what we did, joining with Baird, is to provide continuity of service to our customer, and while we are at a point where we should be thinking about retirement, our focus really is on continuity.”
“We’re both in excellent health and we enjoy what we are doing,” said Karpinski. “The reality is, we have to think about our customers as well as ourselves.”
Peel has high praise for his two new veteran employees.
“One of them beats me in to work in the morning and the other one is always here when I leave,” quipped Peel.
VanderWal said the firm’s clients over the years have been accustomed to dealing in individual securities as opposed to mutual funds — “and that’s been our forte.” He said that when clients get “a tome” of information from a company promoting its stock, the clients “like to be able to call somebody and ask, ‘Is this good or bad?’ We try to be prepared for those kinds of calls.”
VanderWal said that the day before he spoke to the Business Journal, he received a very thick prospectus involving a merger — so thick, he got out a ruler and measured it. “That prospectus was actually one-inch thick,” he said, chuckling.
The company’s clientele, he said, have always gravitated toward “security and the possibility of reasonable income, and reasonable potential of appreciation.” He said they purchase stocks “primarily on the basis of what we call fundamentals, a reasonable relationship between the market price and the asset values of companies.”
He said they have always urged clients to “take the long-term approach. Sometimes it seems like holding something forever — and that can be awfully good.”
Much has changed in the world of stock trading since VanderWal and Kapinski started their careers. Now, they said, a much larger portion of the American population has money invested in the stock market in some form or another than during the 1960s.
“You have to remember that when I started in, the average volume of the New York Stock Exchange was like 3.5 million shares a day. And now, sometimes one trade is that,” said VanderWal.
He mentioned two major events in the history of the stock market that he witnessed, both involving the federal government. One was the famous paperwork logjam of 1968. According to The New York Times archives, the markets were closed for four days that summer to allow traders to clear up paperwork logjams that threatened to halt the trading process completely.
VanderWal said the government reacted with a “significant amount of regulation” to force the industry to modernize with the use of computers.
Peninsular was originally a self-clearing brokerage, which involves handling all of the fine details within a transaction. Now it uses Pershing. That change, and the advent of computers, enabled the firm to increase its client list and efficiently keep key records closer at hand.
The other historic event was 9-11, which led to the Patriot Act — “another avalanche of new regulations from Washington,” said VanderWal.
“We are a highly regulated business and we’ve learned to live with it; comply with it, and make sure our clients do as well,” he said.
Paul Purcell, Baird chairman, president and CEO, said at a company meeting in February that the investing environment “feels a lot better this year than it did last year.”
“Last year, the fourth quarter of 2008 and first quarter of 2009 were clearly the most challenging markets I’ve ever seen. We’ve never seen anything like it since the Great Depression,” he said.
Purcell said that despite the recession, “Baird was never in jeopardy one second … because of the way we’ve managed the firm in an unleveraged and highly conservative way.”
Baird had revenue of approximately $718 million in 2009, up from $680 million in 2008. Operating income of approximately$62 million was lower than the nearly $71 million earned a year ago. Book value increased by approximately 6.4 percent over 2009.