Brown Advisory is a Baltimore-based registered investment advisor (RIA) that has been providing active investment management services since 1993. It currently has more than $47 billion in assets under management (AUM).
The firm primarily works with high-net-worth individuals and families, along with their related trusts, estates, retirement plans and other taxable accounts or entities. It also offers its services to corporations and insurance companies.
The firm specializes in actively managed equity, fixed income and balanced investment portfolios. But it can also offer investment-related financial planning services.
Brown Advisory Background
Brown Advisory formed in 1993 as the investment management branch of Alex Brown & Sons, a Baltimore-based investment bank founded in 1800. In 1998, Brown Advisory became independently owned via an employee-led buyout.
Today, it’s a wholly owned subsidiary of Brown Advisory Management, LLC (BAM). The managing member of BAM and Brown Adsvisory’s controlling entity is Brown Advisory Incorporated (BAI), which is organized as a Maryland C corporation.
With more than 100 investment advisors, Brown Advisory is led by CEO and President Michael D. Hankin. He’s been in the financial services industry since the 1970s. Additionally, Hankin serves as trustee and vice chair of Johns Hopkins Medicine and chair of the board of managers of the Johns Hopkins University Applied Physics Lab.
Brown Advsory’s mission is to provide strategic advice in order to achieve first-rate investment performance.
What Types of Clients Does Brown Advisory Accept?
Brown Advisory works with a diverse pool of clients. According to documents it recently filed with the SEC, the firm can help the following types of clients:
- High-net-worth individuals and families
- Pooled vehicles, including registered investment companies, UCITS and private funds
- Charitable organizations
- Public/government-related clients
- Pension and profit-sharing plans
- Insurance companies
- Individual retirement plans (IRA)
- Charitable institutions
- Religious institutions
- Other taxable individual accounts
Brown Advisory Minimum Account Size
Although Brown Advisory generally requires a minimum investment of $5 million, it may waive this requirement on its own discretion. The decision would depend on the client relationship, client service requirements and other circumstances.
Services Offered by Brown Advisory
Brown Advisory specializes in providing investment portfolio management services. It does this by applying active equity, active fixed income and balanced portfolio investment strategies to different model portfolios.
The firm typically offers investment management services on a discretionary basis. This means the firm has the authorization to buy and sell securities within your account as it deems fit based on your individual situation. However, clients may place reasonable restrictions on certain securities by contacting the firm.
Brown Advisory also offers financial planning advice under its strategic advisory services wing. Depending on your needs, the firm may advise on the following investment-related financial topics:
- Tax planning
- Trust management
- Estate planning
- Philanthropic inititiaitves
- Family business advice
In addition, the firm’s advisors work with clients’ accountants, lawyers and other professionals in order to create a comprehensive wealth management plan. Brown Advisory offers its strategic advisory services to its clients free of charge.
Brown Advisory Investment Philosophy
By actively selecting securities for investment, Brown Advisory offers equity investment strategies designed to seek long-term capital appreciation. Unlike some firms, Brown Advisory doesn’t aim to track the performance of an equity index of securities. Instead, it attempts to outperform it in the long term by using its own expertise and research.
This is generally what differentiates active investing from passive investing.
Brown Advisory applies this method to its fixed-income strategies, which mainly seek bonds with capital appreciation potential that is not related to the general movement of interest rates. The firm’s balanced strategies combine the objectives of its equity and fixed-income strategies.
Below, we lay out how Brown Advisory breaks down these three investment strategies across different model portfolios.
|Large-Cap Growth||Invests primarily in the common stocks of domestic, predominantly large-capitalization companies (typically those with a market capitalization greater than $2 billion at the time of purchase) that the firm believes has prospects for above-average, sustainable earnings growth|
|Flexible Equity||Invests primarily in the common stocks of predominantly large-cap companies (typically those with a capitalization greater than $2 billion at the time of purchase) that the firm believes are value-creating businesses trading at discounts to their intrinsic worth. This strategy may invest up to 20% of assets in fixed income securities.|
|Equity Income||Invests primarily in the common stocks of high-quality companies with medium and large capitalizations (typically greater than $2 billion at the time of purchase) with above average dividend yields and the potential for dividend growth. This strategy may invest up to 20% of assets in fixed income securities.|
|Small-Cap Growth||Invests primarily in the common stocks of domestic, small-cap companies (typically those with a capitalization at the upper limit of $6 billion or the maximum capitalization of companies in the Russell 2000 Growth Index at the time of purchase) that have prospects for above-average sustainable earnings growth|
|Small-Cap Value||Invests primarily in the common stocks of domestic, small- capitalization companies (typically less than $6 billion at the time of purchase) that the firm believes are mispriced by the market relative to a fundamental assessment of their underlying value|
|Mid-Cap Growth||Invests primarily in the common stocks of mid-cap companies that the firm believes have prospects for above-average, sustainable earnings growth|
|Large-Cap Sustainable Growth||Invests primarily in the common stocks of mid- and large-cap companies (typically those with a capitalization greater than $2 billion at the time of purchase) that the firm believes have prospects for above-average, sustainable earnings growth. The strategy focuses on companies with sustainable business advantages (SBA), defined as sustainable strategies or characteristics that tangibly impact financial performance and stock valuation.|
|All-Cap||Invests primarily in the common stocks of companies that the firm believes possess distinct competitive advantages and quality management teams that have demonstrated superior stewardship. This strategy seeks attractive returns as well as tax efficiency by holding companies over a long-term investment horizon and targeting low portfolio turnover. The strategy is not bound by a specific investment style or market capitalization range.|
|Emerging Markets||Invests primarily in the common stocks of companies that are established or operating in emerging market countries in Latin America, Asia, Eastern Europe, Africa and the Middle East. The strategy is not bound by a specific market capitalization range. This is a sub-advised strategy offered through a U.S.-registered open-ended mutual fund.|
|Strategic European Equity||Invests primarily in the common stocks of companies established or operating in Europe. The strategy is not bound by a specific market capitalization range. This is a sub-advised strategy offered through a U.S.-registered open-ended mutual fund.|
|Global Leaders||Invests primarily in the common stock of companies that the portfoliomanager believes deliver market-leading customer outcomes and demonstrate strong leadership within their industries. This strategy is not bound by geographic considerations. The manager focuses on companies with the potential to deliver high relative return on invested capital (RoIC) over time.|
|Latin America Equity Strategy||Seeks to achieve capital growth by investing in a concentrated portfolio of common shares of high-quality Latin American growth companies, primarily in Brazil, Mexico, Colombia, Chile, Peru and Argentina. The strategy seeks high absolute returns over the long term and minimizes the level of long-term risk by choosing well-capitalized, high-quality investments at reasonable valuations.|
|Fundamental Long/Short||Seeks to provide long and short investing and concentrates on underfollowed and inefficient areas of the market, which include companies with market capitalizations typically less than $6 billion at the time of purchase. It will also invest opportunistically in corporate actions, debt investments and special investments.|
|U.S. Large-Cap ESG||Invests in a concentrated, high-active share basket of securities that have undergone environmental, social and governance (ESG) screening and are assembled into a portfolio that exhibits low tracking error relative to the Russell 1000 Index.|
|U.S. Small-Cap ESG||Invests in a concentrated, high-active share basket of securities that have undergone ESG screening and are assembled into a portfolio that exhibits low-tracking error relative to the Russell 2000 Index.|
|Optimal Yield||An all-cap solution seeking to achieve maximum yield through a concentrated portfolio of equities with a focus on diversification, risk management and reduced factor correlation of underlying securities|
|Customized and Client-Driven Solutions||These products draw from the universe of securities that are covered by Brown Advisory’s fundamental research to build portfolios that are intended to meet various needs, including absolute return. They have a low-tracking error and actively screened for sustainability and values. These are available as institutional composites and separate accounts for private clients.|
|Intermediate Income||Invests primarily in high-credit-quality taxable, fixed income securities in portfolios of an intermediate maturity, between one and 10 years or an average duration between three and five years|
|Core Fixed Income||Invests primarily in high-credit-quality taxable fixed income securities in portfolios with target durations between four and seven years. The strategy may invest up to 20% of assets in high-yield fixed income securities.|
|Limited Duration||Invests primarily in high-credit-quality taxable fixed income securities in portfolios with target durations between three and five years.|
|Intermediate Municipal||Invests primarily in high-credit-quality, tax-exempt securities in portfolios with target durations between three and six years. The strategy may invest up to 20% of assets in non-rated securities.|
|Enhanced Cash||Invests primarily in high-credit-quality, taxable fixed-income securities in portfolios with target durations between zero and two years.|
|Mortgage Securities||Invests primarily in investment-grade, mortgage-related securities. The strategy may invest in derivative instruments such as options, futures contracts and options on futures. This strategy will typically invest in fixed income instruments that pay principal over time. Portfolio securities typically have an expected duration in the range of two to eight years.|
|Total Return Strategy||Seeks a high level of current income consistent with preservation of principal by investing primarily in U.S. government securities, corporate fixed income securities (including high-yield bonds), mortgage-backed and asset-backed securities, and municipal securities. The Strategy will invest across a wide range of maturities and may access a variety of instruments such as high-yield securities; derivatives including futures, interest rate swaps and credit default swaps; bank loans; and securities denominated in non-U.S. currencies.|
|Strategic Bond Strategy||Seeks income and capital appreciation with low correlation to interest rate movements by investing in various fixed income sectors including municipal bonds, corporate bonds, U.S. Treasury bonds, Treasury Inflation Protected Securities(TIPS), non-U.S. dollar bonds, mortgage-backed securities, asset-backed securities, bank loans, collateralized loan obligations and cash equivalents. The strategy may invest in securities of any maturity and/or credit quality rating, and is not limited in terms of how much it invests in high-yield securities. Additionally, the strategy may use derivatives, including credit default swaps, other swaps, futures and options.|
|Core Sustainable Fixed Income||Invests primarily in high-credit-quality taxable fixed income securities in portfolios with target durations between four and seven years. The strategy may invest up to 20% of assets in high-yield fixed income securities. The strategy seeks to identify bonds and bond issuers whose social and environmental characteristics have the potential for enhanced returns or reduced risk over time. This framework supplements the fundamental credit research used to evaluate the quality and return potential of any bond considered for the portfolio. The strategy also seeks bonds whose proceeds are used to fund projects that the firm believes have a positive social and environmental impact.|
|Tax-Exempt Sustainable Fixed Income||Invests primarily in high-credit-quality, tax-exempt securities in portfolios with target durations between three and six years. The strategy may invest up to 20% of assets in non-rated securities. It seeks to identify bonds and municipalities whose social and environmental characteristics offer the potential for enhanced returns or reduced risk over time. The strategy also seeks bonds whose proceeds are used to fund projects that we believe have a positive social and environmental impact.|
Balanced or Multi-Asset Strategies
|Sustainable Balanced||A balanced portfolio of high-conviction, fossil-fuel-free individualsecurities and fixed-income securities. Using fundamental research, integrated ESG analysis and tactical asset allocation, the portfolio is composed of companies with strong fundamentals and sustainability opportunities.|
Fees Under Brown Advisory
Clients of Brown Advisory typically pay annual fees for portfolio management services based on a percentage of their account sizes. We lay out the firm’s current fee schedule for annual asset-based fees below:
|The First $5 million under management||1.00%|
|The Next $5 million under management||0.75%|
|The next $15 million under management||0.50%|
|The next $75 million under management||0.35%|
|Amounts more than $100 million under management||0.30%|
In cases where Brown Advisory waives the minimum investment requirement, the following fee schedule applies:
|The first $3 million under management||1.25%|
|The next $2 million under management||1.00%|
Brown Advisory presents its fee schedule based on an annual rate. But keep in mind that the firm collects fees on a quarterly basis, so your fees would be charged as one-fourth of the applicable annual fee.
Also, these asset-based fees don’t include other expenses associated with the management of your account. These may include fees charged by the client’s custodian and fees related to the management of underlying funds that client portfolios invest in. While these fees aren’t paid to Brown Advisory, they’ll reduce your account size accordingly. Still, this structure is nearly universal in the investment management industry.
Check out the table below to see how Brown Advisory’s fees for its management services compared to those at similar financial advisor firms. Note that these fees are only estimates and actual costs may vary.
|Your Assets||Fees for brown Advisory Clients||National Median Advisory fee*|
|$5 million||$50,000||$25,000 - $32,500|
*Fee estimates only consider the maximum base fees for the services each firm provides. You may also pay manager fees and other fees, which can vary in amount. **All figures are based on median fee levels according to Bob Veres' 2017 Planning Profession Fee Survey. The above estimates solely take into account AUM-only fees. Total costs will likely be higher due to additional expenses.
What to Watch Out For With Brown Advisory
Brown Advisory and its representatives in their individual capacities may be affiliated with other related or unrelated firms in the financial services industry. For instance, members of Brown Advisory may also serve as registered representatives for firm affiliated broker-dealer. Brown Advisory Securities, LLC (BAS). However, Brown Advisory does not typically collect compensation such as commissions from such firms.
Indeed, Brown Advisory notes that “although BAS may recommend or effect transactions for shared clients, we do not transact with BAS unless a client has specifically directed us to do so.”
In any case, Brown Advisory is legally required to uphold its fiduciary duty and always work in the best interests of the client. Should any potential conflict of interest arise, the firm must disclose this situation to its clients.
Also, though Brown Advisory offers financial planning as it relates to investment management through its strategic advisory services division, it may not touch upon matter unrelated to investing, such as basic financial planning. The scope of this service ultimately depends on the agreements you make with the firm and what its advisors can offer.
Brown Advisory Disclosures
Neither Brown Advisory nor any of its supervised persons have undergone any legal or disciplinary event, according to paperwork the firm recently filed with the SEC.
Opening an Account With Brown Advisory
The easiest way to open an account with Brown Advisory is by calling its main line at (410) 537-5400. Or you can visit its official website at https://www.brownadvisory.com/ and click on the “Contact us” tab to send Brown Advisory a secure a message.
Where Is Brown Advisory Located?
Brown Advisory manages branches across the U.S. and overseas. We provide contact information for each below:
500 West 2nd Street | Suite 1850 Austin, Texas 78701
901 S Bond Street | Suite 400 Baltimore, Maryland 21231
5404 Wisconsin Avenue | Suite 1000 Chevy Chase MD 20815
100 High Street, 27th Floor Boston, Massachusetts 02110
1295 Environ Way Chapel Hill, North Carolina 27517
410 East Water Street | Suite 500 Charlottesville, Virginia 22902
101 West Main Street | Suite 700 Norfolk Virginia 23510
117 South 14th Street | Suite 300 Richmond, Virginia 23219
5701 Kennett Pike | Suite 100 Centreville, Delaware 19807
12 East 49th Street, 35th Floor New York, New York 10017
6-10 Bruton Street, London, United Kingdom W1J 6PX
Singapore Land Tower, 37th Floor Suite 01A 50 Raffles Place 048623
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