When the stock market plunged from late August to October last year, brokerage firms' brisk pace of hiring brokers slowed.
Merrill Lynch announced layoffs in October--3,400 positions--but none of them were brokers. The cuts included corporate, institutional and debt markets personnel. Merrill's third-quarter report states, "Despite these near-term staff reductions, Merrill Lynch will continue to hire Financial Consultants and other producers in certain business lines."
As of October '98, Merrill had 17,800 financial consultants worldwide, including 600 brokers hired in early '98 from Japan-based Yamaichi Securities and 1,275 brokers added with Merrill's June acquisition of Canadian brokerage Midland Walwyn.
Merrill plans to have a total of 20,000 U.S. brokers by early next century, according to published reports. The firm appears to be on target to meet its goal, having added 2,500 brokers from December '97 to October '98, including the Yamaichi and Midland reps, although it may have to depend on another acquisition or two.
Other firms have seen ambitious hiring plans waylaid:
Salomon Smith Barney announced layoffs in the fixed-income area after the Citicorp and Travelers merger in October '98. In December, Citigroup revealed it would be cutting 10,400 jobs--the largest portion in the consumer business area. Specifics were not provided at that time.
In terms of brokers, Salomon Smith Barney had one of the slowest hiring paces of all the big brokerage firms. At year-end '97, the firm had 10,300 reps. In June '98, it had 10,400 brokers and 10,600 by October, remaining level in December. The firm originally planned to hire 1,400 financial consultants in '98, but as of early December, the firm was 1,100 brokers short of its goal.
Morgan Stanley Dean Witter also slowed its hiring pace in '98. In December '97, the firm had 9,946 brokers, an increase of 866 brokers from year-end '96. From January to May '98, the firm added 704 brokers, bringing the total to 10,650. From May to August '98, the pace slowed to 103 additional brokers, bringing the total to 10,753, where it remained in late September '98.
The firm's original plan was to hire 1,000 brokers in '98. As of late September, MSDW was 200 brokers short of hitting its target.
PaineWebber's hiring pace slowed in '98, too. As of Sept. 30, 1998, PaineWebber had 6,739 brokers, an increase of approximately 500 brokers from year-end '97. According to the firm's '97 annual report, its '98 plans were "to recruit and train 1,200 investment executives, twice the number in 1997" and to enlarge its sales force to 8,000 by 2000. The firm did not appear to be on track with its '98 hiring goals.
Prudential Securities' annual report for '97 states that the firm hired and trained 1,200 brokers out of 13,000 applicants in '97. At year-end '97, there were 6,000 Prudential brokers, and by July '98, the number had risen to 6,700. From July to October '98, the number stayed flat, putting the firm 500 brokers short of maintaining its '97 hiring pace.
A.G. Edwards had 6,289 reps in February '98 (the end of its fiscal year), an increase of more than 200 reps from '97. In May '98, A.G. Edwards had 6,326 reps; in August 6,388, which remained flat in November. The firm's February '98 annual report states, "The Company intends to continue expanding its distribution system as opportunities present themselves."
Everen Securities had 1,330 brokers as of year-end '97. The firm added 113 producers that year, and according to the firm's annual report planned to grow the sales force with a "combination of recruitment, training and additional acquisitions of securities firms."
In early '98, Everen added 400 brokers with its acquisition of Principal Financial Securities, pushing the total number of Everen reps to 1,730, which stayed flat in November '98.
Edward Jones had 3,700 reps as of February '98, which rose to 4,000 in June and 4,300 in December--an increase of 600 reps for the year. Jones plans to expand to 10,000 offices (i.e., reps) by 2004. If Jones maintains its '98 hiring pace, the firm will fall short of its goal by 2,000 to 3,000 reps a year.