BofA will cut Merrill Comp
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I must be naive but I thought clients did business with individuals via referrals. Silly me!
[quote=Gordon Gekko]
I must be naive but I thought clients did business with individuals via referrals. Silly me!
[/quote]During a roarinig bull market. When investors lose 40% of their
equity they are nobody’s friend and tend to seek shelter in the big
names.
There is an assumption–erroneous, but there–that a firm like Merrill would not hire a dumb ass.
I sort of agree with you, PP. Working at WS, I heard the freakouts going on at the other side of the phone when talking about the future of Wachovia. ML is still the daddy, I just think that big banks can’t totally kill the entreprenurial spirit that advisors have and that indy reps really seem to have. Again, I work at WS/prior AGE. Ken Lewis is so full of crap. He didn’t say anything about his pay voluntarily going down. Having worked at NationsBank, I would not want to be heading back into that abyss.
I think you’re missing Gordon’s point.
When you sit down with a prospect that was referred to you, they tend to build the relationship with the individual broker versus the brand on your business card. The most successful books are built on personal relationships. Not many BEST clients will come to you based on the shingle on your door, maybe a few but you will never build a book of these based on "who" you work for.[quote=Gordon Gekko]I sort of agree with you, PP. Working at WS, I
heard the freakouts going on at the other side of the phone when
talking about the future of Wachovia. ML is still the daddy, I just
think that big banks can’t totally kill the entreprenurial spirit that
advisors have and that indy reps really seem to have. Again, I work at
WS/prior AGE. Ken Lewis is so full of crap. He didn’t say anything
about his pay voluntarily going down. Having worked at NationsBank, I
would not want to be heading back into that abyss. [/quote]
Ken Lewis’ compensation is irrelevant. He’s the boss and what he wants to do to you matters, you can do nothing to him.
Banks are notoriously conservative, both in their practices and in
their rank and file compensation. There are going to be wealth
management types and trust officers whose voices will be heard—and
what they’re going to be saying is that they want to be paid as much as
a wirehouse broker–or they want the wirehouse brokers to be paid as
little as they are.
The latter argument will win.
I guess you don't see the craziness of your statements given the mess we are in. Conservative? Like leverage and derivatives they don't even understand?
And I would say Lewis' comp is totally relevant because it undermines the BS he spews on 60 Minutes.[quote=Broker Fee]I think you’re missing Gordon’s point.
When you sit down with a prospect that was referred to you, they tend to build the relationship with the individual broker versus the brand on your business card. The most successful books are built on personal relationships. Not many BEST clients will come to you based on the shingle on your door, maybe a few but you will never build a book of these based on "who" you work for. [/quote]I understand and would have agreed with you last year. But what has happened changes the entire landscape.
It's irrational, but people do not make rational decisions when under stress. Every account in the investment universe is now in play--certainly every retail account--but even institutional players are wondering about the quality of the executions they're getting.
The guy or gal who has as many, "There ain't nobody better or bigger" in their column is going to win.
I suggest that many of you guys are too close to the epicenter to be impartial, and that, to a degree, you're whistling past the graveyard.
I suggest your hubris is leading you to make predictions that nobody knows at this point. But hey, I don't have that crystal ball that you have.
I don’t think the brand name helps you in this market. Maybe in past markets when it wasn’t the “Financial Sector” that caused all the problems, not to mention clients who got stuck with ARS(I swear they are liquid and like cash)… Brand name won’t help anyone now, because it’s that same brand name that is being flashed across the news saying how they didn’t know what was happening(Wachovia $24 Billion in losses)
Would a bank be interested in buying EJones? I’ve heard that one reason EJ wants to grow is to avoid being bought. (Or maybe the GPs are trying to grow to make themselves more attractive)?
[quote=Gordon Gekko]
I suggest your hubris is leading you to make
predictions that nobody knows at this point. But hey, I don’t have that
crystal ball that you have.
The coming year is going to be the most stressful in retail brokerage since the 1970s.
There is no reason to know this little stat, but it’s a fact that there
are almost no people in their sixties who work for, or worked for, a
Wall Street firm as a retail broker.
The reason is because they would have been in their late 20s and
thirties back in the 1968 to 1982 malaise period and they just gave up
and went to work at places like IBM and NCR.
I got registered in 1972. Nobody in my training class of 31 was
still in production in 1982. I am not unusual in that
experience. By the time the market turned up in 1982 a twenty
broker office might have three or four people–almost all of them older
guys who have died by now or are drooling in some place.
As the market improved the desire to be a stockbroker returned to the
younger people. Some guy who was born in 1955 was 27 when the
market bottomed. If he had a resume that catches the eye he was
offered a job. If he was any good he made it, and he made it in
spades because he has enjoyed the longest bull market in history.
I know, I know–October 1987, the tech bubble, the decline after
September 11th. Those were minor downturns in an overall bull
market.
What has happened in the last couple of months is a market crash–and along with it went investor confidence.
In 1987 confidence was not lost because it came back so quickly.
The tech bubble was so obscene that only true morons got caught–JDS
Uniphase was worth more than Wal*Mart? Give me a break…
How about that sock puppet dog–whatever that company was got to be
more valuable than IBM. Nuts.
Then there was the decline after September 11th. Investor
confidence was held up because it was patriotic to be confident in
America.
But there is no patriotism in play today, there is no ridiculous tech
bubble to look back at and it is not going to bounce back in a few days
like it did in 1987.
In the 14 years from 1968 to 1982 the Dow Jones traded in a 500 point
range. As I said I got my ticket in September 1972 and lived
through it. I understand the urge for the reader to say, “Next
he’s going to talk about walking through the snow to school”–but what
you must never lose sight of is the fact that the market is cyclical
and it’s time we have another cycle like that.
There are millions and millions and millions of investors who have watched billions of dollars worth of equity simply evaporate.
I understand that the US is not going out of business, and that someday
Apple will probably trade at 190 again. But in the mean time I
also understand that there are all sorts of resistance points between
98 and 190 and it’s going to take years to get past the overhanging
supply that materializes everytime a stock advances even a little bit.
But back to today. The industry is consolidating and the banks
are the owners of the household names. Now that there’s nowhere
for a great branch manager or a million dollar producer to go
that isn’t another bank you can bet that the cuts in compensation are
coming.
The banks are not going to sit by and watch their AUM leave for the
RJFS or LPL platforms. Hell they may buy them next—Tom James is
pushing 70 and unless it’s changed hands while I wasn’t watching LPL is
owned by veture capitalists who are known for building something up and
then selling it.
Well, the chance to build it up just went up in a cloud of smoke–how long do you figure they’ll hold on to it?
[quote=Squash]I don’t think the brand name helps you in this market.
Maybe in past markets when it wasn’t the “Financial Sector” that caused
all the problems, not to mention clients who got stuck with ARS(I swear
they are liquid and like cash)… Brand name won’t help anyone now,
because it’s that same brand name that is being flashed across the news
saying how they didn’t know what was happening(Wachovia $24 Billion in
losses)[/quote]
99.99% of the population has no idea that Wachovia has been invovled in "issues."
90% of investors don’t know it either. They hear this stuff and immediately forget it.
What they don’t forget is the fact that they see a Wachovia branch ever
two or three miles on their drive to work, the mall, the kids soccer
game and to their mistress’ apartment.
They never see LPL Financial Services unless they read a magazine aimed
at the industry. Your prospects are not reading those
magazines. We tend to believe that everybody knows this stuff
because it’s so meaningful to us.
To them what matters is “Who’s on the pole.”
[quote=buyandhold]Would a bank be interested in buying EJones? I’ve
heard that one reason EJ wants to grow is to avoid being bought. (Or
maybe the GPs are trying to grow to make themselves more attractive)?
[/quote]
Doubtful–not their business model. I happen to be in the camp
that believes that EJ is a giant opportunity that is being mismanaged,
and has been for years. In my previous life I did a lot of
committee style work with John Bachman and at that time it seemed like
EJ had an ideal business plan. I’m not sure where they went off
the tracks, and I hear all the negatives that the EJ haters have had to
say here—so please don’t repeat them.
What I can’t see is them appealing to a bank. A harsh reality is
that they don’t hire the brightest bulbs in the room and they tend to
focus on a segment of the market that is not all that lucrative.
I sort of suspect that EJ will just always be around, nibbling at the
edges, picking up the crumbs. While also being a revolving door
for brokers.
[quote=Provocative Put] [quote=Gordon Gekko]
I suggest your hubris is leading you to make predictions that nobody knows at this point. But hey, I don't have that crystal ball that you have.
[/quote]The coming year is going to be the most stressful in retail brokerage since the 1970s.
There is no reason to know this little stat, but it's a fact that there are almost no people in their sixties who work for, or worked for, a Wall Street firm as a retail broker.
The reason is because they would have been in their late 20s and thirties back in the 1968 to 1982 malaise period and they just gave up and went to work at places like IBM and NCR.
I got registered in 1972. Nobody in my training class of 31 was still in production in 1982. I am not unusual in that experience. By the time the market turned up in 1982 a twenty broker office might have three or four people--almost all of them older guys who have died by now or are drooling in some place.
As the market improved the desire to be a stockbroker returned to the younger people. Some guy who was born in 1955 was 27 when the market bottomed. If he had a resume that catches the eye he was offered a job. If he was any good he made it, and he made it in spades because he has enjoyed the longest bull market in history.
I know, I know--October 1987, the tech bubble, the decline after September 11th. Those were minor downturns in an overall bull market.
What has happened in the last couple of months is a market crash--and along with it went investor confidence.
In 1987 confidence was not lost because it came back so quickly. The tech bubble was so obscene that only true morons got caught--JDS Uniphase was worth more than Wal*Mart? Give me a break.. How about that sock puppet dog--whatever that company was got to be more valuable than IBM. Nuts.
Then there was the decline after September 11th. Investor confidence was held up because it was patriotic to be confident in America.
But there is no patriotism in play today, there is no ridiculous tech bubble to look back at and it is not going to bounce back in a few days like it did in 1987.
In the 14 years from 1968 to 1982 the Dow Jones traded in a 500 point range. As I said I got my ticket in September 1972 and lived through it. I understand the urge for the reader to say, "Next he's going to talk about walking through the snow to school"--but what you must never lose sight of is the fact that the market is cyclical and it's time we have another cycle like that.
There are millions and millions and millions of investors who have watched billions of dollars worth of equity simply evaporate.
I understand that the US is not going out of business, and that someday Apple will probably trade at 190 again. But in the mean time I also understand that there are all sorts of resistance points between 98 and 190 and it's going to take years to get past the overhanging supply that materializes everytime a stock advances even a little bit.
But back to today. The industry is consolidating and the banks are the owners of the household names. Now that there's nowhere for a great branch manager or a million dollar producer to go that isn't another bank you can bet that the cuts in compensation are coming.
The banks are not going to sit by and watch their AUM leave for the RJFS or LPL platforms. Hell they may buy them next---Tom James is pushing 70 and unless it's changed hands while I wasn't watching LPL is owned by veture capitalists who are known for building something up and then selling it.
Well, the chance to build it up just went up in a cloud of smoke--how long do you figure they'll hold on to it?
Pretty Long so maybe I lost all the points..but when looking at the chart from 72-82 can see what you are saying, I think when the dust settles here DOW 6000, 7000, 8000 we are looking a shell shocked investor for a long time, going to be brutal..You spell it out clearly, My dad started in 69 and says like you only 2-3 out of 30 in his office where there at the end of it dead period.
[/quote]
[quote=shredder]Wow Put, that is very sobering…just shoot me now![/quote]
Just always have a fall back plan, and if you can land in a premier
firm do so. It will be a safe place to wait out the storm.
If you don’t have the pedigree to be hired at a Merrill or Smith Barney
it might be best to simply cast your lot with a premier insurance
company. There are those who will tell you that there is more
opportunity at a place like MetLife than there is at Merrill.
If the goal is to make money and hold your head up high I don’t think I
could disagree. A MetLife guy won’t have the same arsenal of
tricks to serve the clients–but the reality is that most people
shouldn’t be doing more than the basics.
At the end of the day about 90% of us really do need little more
than some more term insurance and a good quality mutual fund family.
What would you do if you were at Jones and had an offer on the table from Merrill?
No, but your scenario played out here in the West also, growing up would listen to my dad tell me the stories about how impossible the business was in the 70's. He has been retired for 10 years or so, said the same thing as you recently, most all the guys he worked with are dead. Stress and back then allowed smoking in the office said killed them all early. I am not as sure about you how this is going to play out, but do think the business is changing in a major way. Maybe only top 10% make it, but I see the banks from the little I know from guys who have gone that route, they do not think the broker is an important part of the wheel, couple of my buddies doing 7 figures there get balls busted and threatened to be replaced several times a year for not sucking up to branch managers etc..in fact one guy has been switched to 4 branches this year and now has a 75 minute commute daily and his t-12 is 1.2MM. Just dont see how this is going to a smooth deal with banks maybe now calling the shots. Also he has been told to expect the grid to go to 25% sometime next year at Wells.Fritz, are you working in the Raleigh area?
[quote=Borker Boy]What would you do if you were at Jones and had an offer on the table from Merrill?[/quote]
Let me see…what would you do?