It's news that Baltimore brokerage Ferris, Baker Watts is selling out to a rival. It's bigger news that it didn't happen 10 years ago.
Give the firm credit for longevity, even if industry fusion finally claimed it. It might have stayed independent even longer, but its own missteps accelerated the inevitable.
Ferris' absorption by Minneapolis-based RBC Dain Rauscher marks another step in a consolidation process that began in 1975, when Congress allowed brokers to cut the price of stock commissions, and accelerated in the 1990s with the fall of barriers between banking and brokering.
Led by patriarch George M. Ferris Jr., who owns 26 percent, the firm navigated the obstacle course better than many. The greatest bull market in history, which began in 1982, lubricated bottom lines and delayed the need for brokers to seek partners even though they were making less money per stock trade.
(There were exceptions. In 1988, Baltimore-based Baker Watts, which had run into trouble with oil and gas partnerships, merged with Washington-based Ferris & Co., founded by George Jr.'s father.)
Perhaps Ferris' greatest promoter was the late broker Julius Westheimer, who wangled a column in The Evening Sun and regular appearances on Wall Street Week with Louis Rukeyser, the popular public television show. Westy's ebullient predictions matched a bubbly market quite nicely - until things collapsed after 2000. Meanwhile, clients called in droves.
Through the 1990s and 2000s the firm also had a good business underwriting stock and bond issues. That kind of product was migrating to larger players, but Ferris pitched itself to companies and municipalities overlooked by Wall Street.
The forces of fusion, however, were growing. One problem was the Internet, which allows investors to bypass brokers and pay $10 or less for a trade. At the other end of the scale were big houses such as Merrill Lynch and Smith Barney, which could swipe star brokers and offer clients more original research.
Ferris' peers continued to disappear into the arms of larger suitors.
In recent years regulation also has also pushed firms toward marrying. As financial firms assumed enormous proportions, so did the frauds they periodically perpetrated on their customers and the safeguards Congress required as a result.
Sarbanes-Oxley and other regulations requiring armies of lawyers and accountants were tailored for firms with 3,000 brokers, not 330, which Ferris has.
