2022 Baird Annual Report Resilience
A Message from Steve Booth
Resilience is the sum of focus, determination and a commitment to evolving through changing times.
I recently celebrated my 29th anniversary at Baird. In that time, we’ve navigated incredible growth and change within our firm while financial markets achieved some of their highest highs and lowest lows in recent memory. Our extraordinary team has enabled us to guide our clients and our firm through these periods of uncertainty, which continued throughout 2022. Along with our associates, our balanced business model, our financial strength and our culture of employee ownership give us stability in the face of change.
Helping our clients effectively navigate uncertainty is essentially the reason why Baird exists. While difficult markets may continue, we know our business and our people are among the very best – and our resilience will strengthen our partnership with our clients in the years ahead.
"Resilience is inherent in our talented, dedicated, and passionate associates."
-Steve Booth, Chairman & CEO
Business Highlights
Despite some challenging market conditions in 2022, we achieved our second-best year ever as a firm. Our revenues totaled $2.79 billion, while our operating income was $477 million.1 Additionally, the firm’s return on book value was nearly 20%.2
The cross-currents in the markets affected our businesses in very different ways throughout the year. Our business model includes five complementary businesses serving clients in a variety of end markets. Our revenues are a balance of recurring fee-based revenues in our Private Wealth Management and Asset Management businesses, as well as more market-dependent transactional revenues in our capital markets and private equity businesses.
We've purposefully built a balanced platform of five complementary business units since our founding in 1919. Our diverse end markets and balanced revenue structure adds another powerful dimension of resilience to Baird, as market challenges in one business can be offset by strength or stability in another. Notable results and developments from across Baird include:
Our Private Wealth Management division posted a record year. In a year where markets began at all-time highs but came under stress due to macroeconomic factors and recession risks, we helped clients navigate the increasing economic uncertainty. Approximately 90% of the business’ revenues were recurring. We also expanded our capacity to serve our clients with the merger into Baird of Pittsburgh-based Hefren-Tillotson, a privately held wealth management firm whose culture meshes perfectly with our own.
Asset Management remained very focused on delivering long-term performance to our investors across our platform. Declines in both the fixed income and equity markets impacted the group’s assets under management as the year progressed, and its combined revenues declined slightly after more than a decade of remarkable growth. I am very pleased to note that Mary Ellen Stanek, President of Baird Funds and Co-Chief Investment Officer of Baird Advisors, was recognized with Morningstar's Outstanding Portfolio Manager Award for 2022.
Equity Capital Markets achieved its second-best year following a significant decline in M&A and equity financing transactions from last year’s record levels. Strength in our equity trading and Strategas businesses also helped to balance the group’s results.
We were able to make several strategic talent additions that will significantly strengthen our position in key markets and product offerings.
In Fixed Income Capital Markets, revenues declined slightly from the elevated levels of the last two years. Our Public Finance team had another exceptional year, helping offset a slower fixed income sales and trading environment.
After record investment gains in 2021, the environment reverted to more normalized and expected levels in 2022 and our Principal Investments team continued its focus on driving operating performance and long-term value within its portfolio of companies.
Additionally, our businesses are supported by more than 1,000 dedicated associates in our best-in-class Corporate Resource Groups (CRGs). These talented professionals partner with colleagues throughout the firm, delivering efficient and effective subject matter expertise and high-touch service to both internal and external clients. Our CRG teams were instrumental in our highly successful integration of Hefren-Tillotson and the onboarding of their clients onto Baird’s platform.
Baird managed or oversaw more than $375 billion
in client assets at the end of 2022, an increase of
more than 277% over the past decade.
Our stock value has increased more than 300% over the past 10 years.3
1Financial results do not reflect the consolidation of certain private equity partnerships.
2Book value return is inclusive of the dividend paid.
3Baird stock performance is based on the change in book value per share for Baird Financial Group common stock and includes cumulative cash dividends per share of $0.55, $0.62, $0.67, $2.50, $0.70, $0.83, $1.83, $2.50 and $1.50 paid in 2013, 2014, 2015, 2016, 2017, 2019, 2020, 2021 and 2022, respectively. Baird is privately held and no public market exists for its shares. Baird can repurchase shares of Baird stock at book value when associates leave the firm. Past performance does not guarantee future results.
Expanding Our Global Footprint
With an eye toward broadening our footprint around the world, Baird continued its global diversification throughout the year. Recognizing how critical our London presence is to our global client base, we doubled the size of our office space in the city. This substantial investment in Baird’s European headquarters positions us to optimize opportunities in the region and continue growing the business, ultimately benefiting our clients in Europe and across the globe. Our Fixed Income Capital Markets business also expanded its capabilities to Europe by welcoming talented professionals based in London in early 2023. Additionally, Baird Capital, our private equity business, opened a new office in Singapore, expanding our footprint and establishing a local presence in an international business hub.
Building on these developments, we launched a comprehensive marketing campaign in concert with The 150th Open at St Andrews, one of professional golf’s major tournaments. This platform helped us to reinforce and grow awareness of Baird’s deep global financial expertise, capabilities and connections while also highlighting the qualities that make Baird different. Our continued growth outside the U.S. extends the balance of our businesses, providing further resilience through global diversification.
Fostering a Great Place to Work
Another way in which we build long-term stability into our business is to ensure that Baird continues to be a place where our associates thrive and succeed. We’re proud to have an unusually long-tenured team with low turnover. When our associates want to be a part of Baird for the long term, they provide exceptional continuity and service to our clients. This creates additional resilience in our business model, as our clients know the people they work with at Baird are likely to be with them for the long term.
Our commitment to being an exceptional place to work has culminated in several recognitions. Baird was named one of the Fortune 100 Best Companies to Work For® in 2023, our 20th consecutive year of recognition on the list. The firm also landed on several other top workplace lists in 2022, including:
- Fortune Best Workplaces for Millennials™
- Fortune Best Workplaces for Women™
- Fortune Best Workplaces in Financial Services & Insurance™
- Best Workplaces for Parents™ by Great Place to Work®
- People magazine’s 100 Companies That Care®
- Pensions & Investments’ Best Places to Work in Money Management
All these recognitions underscore our commitment to our associates and our clients, who know they are working with a firm of people who are engaged and driven, and who will be there for the long term. It’s the kind of consistency and long-term thinking that allows us to support our clients through good years and bad. It also creates resilience that will enable Baird to serve our team, our communities and our clients for years to come.
All my best,
Steve Booth
Chairman & CEO
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