Brokerage Report Cards

Poll NotesEven though the market was more tumultuous this year, reps' opinions about their firms remain remarkably steady in our eighth annual survey of brokerage performance. In general, brokers praise the firms' ethics, rating that highest at 9.27 out of 10. They also prize the freedom from pressure to sell certain products, giving brokerages a 9.10 score on that issue. Both those categories ranked

Poll NotesEven though the market was more tumultuous this year, reps' opinions about their firms remain remarkably steady in our eighth annual survey of brokerage performance. In general, brokers praise the firms' ethics, rating that highest at 9.27 out of 10. They also prize the freedom from pressure to sell certain products, giving brokerages a 9.10 score on that issue. Both those categories ranked best in the survey last year. The gripes are the same as well. The quantity of sales assistants pulls in the lowest rating at 7.02 overall. And the quality of those assistants could use some improvement, too, with firms garnering a 7.45 on that variable.

If anything, brokers seem a wee bit more satisfied this year compared with 1997. Scores in 11 categories increase slightly compared with 1997's results, seven dip slightly and one remains the same. Few of the swings are notable, except for research and training. Marks for research went down to 7.92 this year, from 8.25 in 1997 (probably a reflection of the turbulent market during September and October when the poll was taken). Brokers scored firms' ongoing training programs a bit better this year, boosting that to 8.17 from 7.96 in 1997.

Comparing the performance of the various firms, the loudest applause again is for Edward Jones, whose brokers rank it the highest in 14 of the 17 categories rated. A.G. Edwards also scored consistently well with reps praising their firm's enjoyable atmosphere and accessible management, but wishing for more name recognition.

Morgan Stanley Dean Witter brokers like the firm's image and new information system, but say payout is a sore spot, ranking it lowest of all firms. Everen brokers seem happy with their payout and freedom, but are a little unsure of tomorrow, scoring the firm's strategic focus below the all-firm average.

Alternately, Merrill Lynch reps crow about the firm's strategic position as a global powerhouse, but gripe that the firm skimps on payout, sales assistants and operations. Prudential reps gush about their advanced computer system, but note the firm's lagging public image. And Salomon Smith Barney producers wonder how the deal with Citicorp and Travelers will work out, but say the firm is providing good research, support and freedom. Overall, PaineWebber brokers seem less than enthusiastic about most aspects of the firm, scoring it below the all-firm average in 16 of the 19 categories, including those for hiring, training, strategic focus, and the quote and information system.

Turn to the following pages for specific firm scores, hot company headlines as well as notable quotes from the brokers themselves.

Methodology: How the Firms Were GradedRR polled a total of 400 brokers in September and October. Exactly 50 from each of the top firms were contacted. Those firms include A.G. Edwards, Edward Jones, Everen Securities, Merrill Lynch, Morgan Stanley Dean Witter, PaineWebber, Prudential Securities and Salomon Smith Barney.

Brokers were asked to rank their employers in 19 categories, based on a scale of 1 to 10, with 10 being the best.

The brokers were drawn from a random sample of 4,800 names--600 from each firm--from the magazine's subscriber list. The first 50 willing and available reps who had been with their firm at least one year were polled.

A page of data on each firm is provided. It includes the firm's average score in each category, compared with the all-firm average. Four major categories are broken out--Work Environment, Support, Product and Management. Scores for these four items are averages of the survey items listed below each heading.

Quotes in the firm summaries and in the Quotables section are from brokers who were surveyed. No respondent was quoted more than once within the entire report.

A.G. EdwardsThings don't change much year to year at A.G. Edwards, and brokers like it that way. The St. Louis-basedfirm sticks to its conservative ways, putting clients and brokers ahead of product pushing.

Edwards reps talk about the enjoyable atmosphere and accessible management. "With our lack or proprietary products and sales pressure, we attract some neat folks to work with," says a broker at the firm. Adds another: "The firm is very supportive. They don't chase numbers. Ben Edwards is very accessible. I can pick up the phone and talk to him directly."

That attitude filters down throughout the firm. Operations, for example, has "a positive, helpful attitude that's directed to us right from the top," says one respondent, although some reps complain about slow response times.

Universally, Edwards brokers applaud the firm's image but would also like better name recognition. "We have a very good image among those who know of us. We need to broaden that area so more people know who we are," suggests a rep.

A few brokers grumble about what they fear will be more emphasis on production once CEO Ben Edwards retires. They see some changes already. "The levels you have to produce to be invited on a trip are being raised pretty considerably year in, year out," one producer says. And the firm is too cheap with sales assistants, reps say. They definitely want more training offered to their assistants.

Research, especially high-tech coverage, continues to elicit some criticism. "They're not up to speed on the tech sector," says one rep. "Their strength is in pharmaceuticals and utilities."Another strength that Edwards brokers praise is the firm's rich 401(k) plan. As one rep says, "We're tops in terms of [corporate] benefits to brokers."

Firm ScoresWork Environment Average of Four Items Below 8.80Freedom from pressure to sell certain products 9.90

Realistic sales quotas 8.40

The firm's hiring and recruiting practices 7.82

Payout 9.06

Support Average of Eight Items Below 8.04Sales support 8.26

Quality of sales assistants 7.36

Quantity of sales assistants 7.00

Quality of sales ideas 8.04

Ongoing training 8.12

The quote and information system 8.58

Quality of the firm's operations 8.74

Account statements 8.18

Product Average of Three Items Below 8.27Quality of the firm's research 7.84

The firm's fixed-income pricing 8.20

Quality of the products offered 8.76

Management Average of Four Items Below 8.83Your branch manager 7.52

The firm's strategic focus 8.70

Overall ethics of the firm 9.88

The firm's image with the public 9.22

Edward JonesThe love feast at Edward Jones continues. Brokers at the firm are generally blissful. In fact, Jones pulled in the highest ratings in 14 of the 17 categories RR polled--stumbling with its lowest score of 8.36 for account statements. Jones tied with A.G. Edwards for highest in the broker freedom category with a nearly perfect 9.9 rating.

Other than improved statements (which are coming), Jones reps aren't jonesing for much else. "The firm gives you all the autonomy you want and all the service support you need," one respondent says.

Brokers also praise Jones for its protective clients-first nature. "People say they have a conservative firm, but we prove it in three ways," one rep says. "One, we have zero proprietary products. Two, we have a specific department--a product review department--that every product has to go through first before we sell it. Three, we don't do options and futures. Those are the worst for clients. Why take the risk?"

Jones is fixing the thing that clients had the most trouble with--account statements. New statements debut next year that will give clients a choice of how in-depth they want the information. Brokers expect the changes to be positive.

Jones brokers also want improvements in the breadth of the firm's recognition. They note that too few people know it. "Public awareness is one of our biggest hurdles," says one broker. Jones is trying to jump that with a national advertising campaign. But as a rep observes: "It's going to take a while before we see the results."

In the meantime, brokers continue to revel in the autonomy they have. One Jones rep sums it up: "We're independent but we all kind of subscribe to the same ethics and values. It's the freedom to grow our business in the way we think is best for us that makes us so great."

Firm ScoresWork Environment Average of Four Items Below 9.47Freedom from pressure to sell certain products 9.90

Realistic sales quotas 9.60

The firm's hiring and recruiting practices 9.14

Payout 9.24

Support Average of Eight Items Below 9.16Sales support 9.30

Quality of sales assistants NA

Quantity of sales assistants 9.60

Quality of sales ideas 9.10

Ongoing training 9.20

The quote and information system 9.24

Quality of the firm's operations 9.30

Account statements 8.36

Product Average of Three Items Below 9.16Quality of the firm's research 9.00The firm's fixed-income pricing 8.94

Quality of the products offered 9.54

Management Average of Four Items Below 9.47Your branch manager NA

The firm's strategic focus 9.34

Overall ethics of the firm 9.82

The firm's image with the public 9.24

Everen SecuritiesEveren brokers seem happy today with their payout and freedom, but are a little unsure of tomorrow. The brokers rate the firm's strategic focus below average compared with the other wirehouses. They also complain loudly about Everen's lack of a public image and less than stellar research.

Everen's compensation plan gets wide praise from brokers. "It's easier to make a living here," a rep says. They feel they can operate independently, too. "The firm leaves me alone and lets me do my job, and that's good," another broker adds.

However, brokers seem weary about the direction of the firm. "They don't communicate [the focus] to us very clearly," an Everen rep says. Rumors of acquisition activity rumble through the ranks. But brokers disagree whether Everen is doing the buying or selling. One rep states, "They should have sold us a year ago." While another says, "We're going to be taking over a regional firm in the Southern United States, which will give us more national exposure." Laments a third rep, "They're going to do something, but they've kept us in the dark."

Brokers knock Everen's research department hard for its focus on riskier small- and mid-cap stocks. One critic says, "I don't like it at all. ... If I relied on Everen's research, I would be out of business."

In addition to wanting better research, Everen's brokers also long for a heightened image for the firm. "We have an excellent story to tell but not everyone has heard it yet," a rep says. "I don't get any recognition from people when they hear the firm's name," adds another. A few note some progress with the firm's billboard advertising in sports stadiums.

Overall, the most anticipated change at Everen is its new quote and information system, just hitting some branches as RR conducted its poll. A user of the system says, "We got a brand-new computer system, and it's great."

Firm ScoresWork Environment Average of Four Items Below 8.16Freedom from pressure to sell certain products 9.32

Realistic sales quotas 8.14

The firm's hiring and recruiting practices 7.22

Payout 7.94

Support Average of Eight Items Below 7.61Sales support 7.72

Quality of sales assistants 7.68

Quantity of sales assistants 6.96

Quality of sales ideas 7.14

Ongoing training 7.52

The quote and information system 8.30

Quality of the firm's operations 7.84

Account statements 7.68

Product Average of Three Items Below 7.21Quality of the firm's research 6.22

The firm's fixed-income pricing 7.58

Quality of the products offered 7.82

Management Average of Four Items Below 8.06Your branch manager 7.92

The firm's strategic focus 8.20

Overall ethics of the firm 9.04

The firm's image with the public 7.06

Merrill LynchMerrill Lynch reps crow about the firm's image and integrity, and its position as a global powerhouse.

"The firm's integrity [is] the best anywhere," says one rep. Says another, "The leadership is taking the firm ... ahead of the competition."

But there are gripes. Low payout is always a sore spot at Merrill. A new compensation plan is coming Jan. 1, "but I don't understand [the new payout system]," says a broker. The new pay plan (see Page 24) rewards reps for landing wealthy households. That is one issue an otherwise positive respondent doesn't like: "Sometimes we forget that it takes time to build relationships and we can't just focus on high-net-worth individuals."

Freedom from pressure to sell certain products scores poorly because of the financial plan quota. "It doesn't matter what your level of production is ... you have to meet your quota," says a million-dollar producer. There iss a "cookie-cutter" approach to managing brokers, says a self-described senior producer.

Reps also complain that the firm wants them to take on more administrative tasks electronically. In addition, they say growth has stretched operations. Operations does "a lot with too little help," claims one Merrill rep.

Established producers at the firm question the number of young, inexperienced people the firm is hiring. And while research is well-regarded, a few reps complain about analysts who are slow to react. "We recently had some recommendations blow up, so brokers are pretty ticked off about research right now," notes a broker.

But, overall, brokers at Merrill have faith in where the firm is headed. Says one: "On the branch level we wonder about the firm's strategy. Then three years down the road, we understand the firm's decisions."

Firm ScoresWork Environment Average of Four Items Below 7.67Freedom from pressure to sell certain products 7.92

Realistic sales quotas 8.46

The firm's hiring and recruiting practices 7.56

Payout 6.74

Support Average of Eight Items Below 7.87Sales support 6.96

Quality of sales assistants 7.86

Quantity of sales assistants 6.48

Quality of sales ideas 8.10

Ongoing training 8.50

The quote and information system 8.86

Quality of the firm's operations 8.00

Account statements 8.18

Product Average of Three Items Below 8.20Quality of the firm's research 8.62

The firm's fixed-income pricing 7.44

Quality of the products offered 8.54

Management Average of Four Items Below 8.72Your branch manager 7.44

The firm's strategic focus 8.98

Overall ethics of the firm 9.18

The firm's image with the public 9.26

Morgan Stanley Dean WitterMost Morgan Stanley Dean Witter reps are still positive about the merger, and cite the firm's clean image as a major selling point.

"We've really reaped the benefits in terms of products available, research and ability to offer clients IPOs and secondary offerings," says one broker about the merger. Says another, "It's 110% better for my clients."

Brokers also like that the firm doesn't generate negative headlines (except for some overseas write-offs). "One thing we take for granted is the reputation of the firm--the image has always been good," says a rep.

MSDW brokers are "extremely happy" with the firm's new information system, says one respondent. Operations have improved as well, according to some brokers. In addition, several women at MSDW feel it is perhaps the best place for women in the industry. "This firm is extremely responsive to women brokers," a rep says.

But pay is a sore spot. "They've cut the payout on syndicate twice since the merger," says a broker at the firm. Reps also grumble about not being able to discount heavily.

Brokers disagree about the pressure to sell certain products. One respondent notes (as do others) that "our firm is notorious for having us sell our internal mutual funds." Another counters that there's "no pressure to do our own proprietary mutual funds. Outside wholesalers are welcome."

Hiring practices are consistently criticized, however. "They're hiring people left and right who will never stand a chance of making it in this business," says a respondent.

MSDW producers also give the firm low scores for sales assistants. One respondent observes, "They need to pay them more to attract better people."

Firm ScoresWork Environment Average of Four Items Below 7.57Freedom from pressure to sell certain products 8.22

Realistic sales quotas 8.62

The firm's hiring and recruiting practices 6.74

Payout 6.70

Support Average of Eight Items Below 7.63Sales support 7.54

Quality of sales assistants 7.06

Quantity of sales assistants 6.08

Quality of sales ideas 7.72

Ongoing training 8.12

The quote and information system 9.00

Quality of the firm's operations 7.76

Account statements 7.72

Product Average of Three Items Below 7.89Quality of the firm's research 8.30

The firm's fixed-income pricing 6.98

Quality of the products offered 8.40

Management Average of Four Items Below 8.50Your branch manager 7.68

The firm's strategic focus 8.24

Overall ethics of the firm 9.16

The firm's image with the public 8.90

PaineWebberPaineWebber brokers think the firm has great research and an open work environment. "We're very decentralized," notes one respondent. "The firm lets brokers build their business the way they want." Another rep appreciates the client focus and lack of sales pressure. "Management here has a good handle on the total financial needs of its clients. We're not pushing products. We're providing real services."

Other than those points, PaineWebber brokers are underwhelmed. The firm's scores are below the all-firm average in 16 of the 19 categories, including those for hiring, training, strategic focus, and the quote and information system.

Brokers say the computer system is causing particular grief. "I've been boxing with it all day," quips a rep. Several mention that they are looking forward to the new system being rolled out presently, although none of those polled had tried it. (One respondent says PaineWebber spent $55 million.) Still, most reps are skeptical. "We'll see if it's to my liking," one says. Until the new system is up and running, another rep at the firm states, "We're in the dark ages in technology."

Some brokers have reservations about the firm's recruiting practices, scoring them a 6.88. "They're trying to hire a bunch of rookies," observes one respondent. "It would be better if they recruited existing brokers instead of going after the new people."

When it comes to strategic focus, brokers knock PaineWebber for being a bit of a stick in the mud. "The firm is a little too cautious in its strategic plan--a follower instead of a leader," a rep says.

Others appreciate the solid nature of the firm as a great place to take root. One broker sums it up: "This is a firm that I have a great deal of confidence in because of its strict adherence to compliance and due diligence. It attempts to weed out rogue brokers and to do what is in the best interest of the clients and broker."

Firm ScoresWork Environment Average of Four Items Below 8.00Freedom from pressure to sell certain products 9.18

Realistic sales quotas 8.80

The firm's hiring and recruiting practices 6.88

Payout 7.14

Support Average of Eight Items Below 7.45Sales support 7.54

Quality of sales assistants 7.34

Quantity of sales assistants 6.76

Quality of sales ideas 7.74

Ongoing training 7.60

The quote and information system 7.66

Quality of the firm's operations 7.36

Account statements 7.56

Product Average of Three Items Below 7.83Quality of the firm's research 8.46

The firm's fixed-income pricing 7.00

Quality of the products offered 8.04

Management Average of Four Items Below 8.28Your branch manager 7.78

The firm's strategic foc us 8.24

Overall ethics of the firm 8.90

The firm's image with the public 8.20

Prudential SecuritiesPrudential Securities reps consistently gush about the firm's technology. Its quote and information system scores higher than the all-firm average. "Technology is very, very good," one broker says. Adds another, "Most of our advisers have laptops and know how to use them."

As much as reps love the firm's system, most continue to be somewhat dissatisfied about Prudential's smudged image stemming from its limited partnership debacle. "There are still lingering problems we have to get over, but it keeps coming back up in the press," a rep says. Even so, most agree that Prudential is making progress toward a clean reputation.

Training is a source of pride. "They do as much as possible to keep us informed about business and overall opportunities. The continuing education is superb," one respondent says. Another broker notes that Prudential allows each rep up to $4,000 a year in educational costs outside the firm.

Another bright spot, Prudential's rating for broker freedom is among its highest scores. "While management has been encouraging us to do more fee-based business, they still give you the freedom to run your business the way you see fit," one respondent says. "They respect the fact that you can walk out anytime and set up shop somewhere else."

Several brokers take issue with Prudential's strategic focus. One critic says, "They're trying to focus on high-net-worth clients [but] small clients tend to inherit large sums of money."

Prudential reps also have a problem with the quality of sales assistants. "In terms of sales support, the firm is unreal about how they pay and how they hire people," one rep says.

Firm ScoresWork Environment Average of Four Items Below 7.74Freedom from pressure to sell certain products 8.78

Realistic sales quotas 8.52

The firm's hiring and recruiting practices 6.54

Payout 7.10

Support Average of Eight Items Below 7.74Sales support 7.14

Quality of sales assistants 7.22

Quantity of sales assistants 6.36

Quality of sales ideas 7.48

Ongoing training 8.14

The quote and information system 8.86

Quality of the firm's operations 7.98

Account statements 8.74

Product Average of Three Items Below 7.15Quality of the firm's research 6.88

The firm's fixed-income pricing 6.76

Quality of the products offered 7.80

Management Average of Four Items Below 8.02Your branch manager 8.12

The firm's strategic focus 7.84

Overall ethics of the firm 8.88

The firm's image with the public 7.22

Salomon Smith BarneyThe Citicorp-Travelers merger officially closed as Salomon Smith Barney reps were being polled. Yet SSB reps are still wondering how the deal will work out.

"It will be interesting to see how much the work environment changes. It's only been a day," says one respondent. Adds another rep, "It will be a great combination in the long term, but short term there will be defections because there's too much delay in integrating things, the technology for example." Another broker complains, "We're getting too damn big."

SSB rates well in a number of areas. Notes one rep, "Terrific research, good support, no pressure to sell, and we can run our own business within [certain] guidelines." The firm appreciates that brokers are "responsible first to our clients rather than the firm," says another.

Research gets compliments, although reps also criticize their analysts for being too concerned with investment banking and being slow to downgrade stocks. "We've picked up high-yield bond coverage and a lot of other areas we didn't have" prior to Salomon, says a broker.

The firm's new NextGen information system receives praise as well. "It's the best," gushes one rep. But quantity of sales assistants is a common gripe. "The ones we have are very overworked," says another SSB broker.

Despite uncertainties about what the new Citigroup will be like, SSB reps have confidence that management will do the right thing. "It's the long-term strategic vision of the firm's senior people that makes this company strong," claims a respondent.

Concludes another rep, "A great firm to work for if you want a large New York firm."

Firm ScoresWork Environment Average of Four Items Below 8.64Freedom from pressure to sell certain products 9.60

Realistic sales quotas 9.22

The firm's hiring and recruiting practices 7.46

Payout 8.26

Support Average of Eight Items Below 8.06Sales support 8.20

Quality of sales assistants 7.64

Quantity of sales assistants 6.90

Quality of sales ideas 8.06

Ongoing training 8.18

The quote and information system 8.74

Quality of the firm's operations 8.34

Account statements 8.44

Product Average of Three Items Below 8.06Quality of the firm's research 8.04

The firm's fixed-income pricing 7.54

Quality of the products offered 8.60

Management Average of Four Items Below 8.76Your branch manager 8.18

The firm's strategic focus 8.72

Overall ethics of the firm 9.28

The firm's image with the public 8.84

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