There was a time when the institutional side of a securities firm would walk with a swagger. After all, it was you, the retail financial advisor, who was stuck making presentations at a coffee table with mom-and-pops. Institutional brokers, meanwhile, were busy selling fancy derivatives to some extravagant, incredibly wealthy hedge fund manager. After a presentation, just imagine the institutional salesman retiring for drinks and steaks at Frank Joseph's steakhouse downtown. You? You probably climbed back into your SUV and drove home for a meal with your family.
Turns out, you might have the better life. As you know, investment bankers, securities analysts, derivative salesmen — employees from nearly every business unit — are getting fired. In total, about 50,000 securities industry employees in the United States lost their jobs this year. But not retail financial advisors; the wealth management units, by comparison, are doing very well.
A blog called HereIsTheCity.com, a five-year-old financial news website based in London, has created a new league table: The Credit Crunch In Context. “We thought it would be interesting to work out just how much in write-downs and credit losses firms have written off per wholesale banking employee,” the site says. (By wholesale employee, the site means non-retail brokerage, or private client wealth management staff.) The site's findings are amazing. Here is an excerpt:
| Firm | Write-downs/Credit Loss | Wholesale Bankers | Loss Per Banker |
|---|---|---|---|
| Wachovia | $7 billion | 3,900 | $1.8 million |
| UBS | 37 billion | 22,000 | 1.7 million |
| Citigroup | 40.9 billion | 30,000 | 1.4 million |
| BoA | 14.8 billion | 20,000 | 740,000 |
| Merrill Lynch | 31.7 billion | 48,100 | 659,044 |
| JPM Chase | 9.8 billion | 25,000 | 392,000 |
| M. Stanley | 12.6 billion | 38,050 | 331,143 |
| Goldman Sachs | 4.1 billion | 30,000 | 133,667 |
By contrast, turn to our compensation survey, and note that wirehouse advisors, on average, grossed about $500,000 last year. (Some other surveys say the average wirehouse production is even higher — closer to $800,000.) That may have seemed small potatoes once, but it sure glows by comparison now.
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