Lazard

By the 1970s, Lazard had built a major trading operation alongside its 1848 New Orleans heritage. Currency traders held positions risking the firm's capital. Goldman Sachs and Morgan Stanley built massive trading operations. Lazard's leadership made a counterintuitive decision, dismantle trading entirely. The firm would advise, not trade. Charge fees, not risk capital. Money would flow from advice, not market positions. Advisory fees ran 1 to 2% of transaction value. A $5 billion merger generated $50 to $100 million in fees. The company captured fees purely through advice. No capital deployed. No bond inventory. No proprietary bets. By 2023, annual advisory revenue exceeded $1.8 billion. The model was straightforward. Charge for insight eliminate risk. Operating margins exceeded 30%. Advisory required no capital infrastructure, no traders. Compensation consumed roughly 58% of revenue, leaving 700 million annually in operating profit.