WealthManagement Magazine

Leave Brokers Alone

Managements don't have to do much more than that.I hate to admit it, but our annual Brokerage Report Card survey turns up similar concerns year to year. What do brokers consistently want from a firm? In a word, nothing.More than anything, they want to be left alone to serve their clients as they see fit. Positive comments about firms nearly always revolve around the issue of independence. Leave 'em

Managements don't have to do much more than that.

I hate to admit it, but our annual Brokerage Report Card survey turns up similar concerns year to year. What do brokers consistently want from a firm? In a word, nothing.

More than anything, they want to be left alone to serve their clients as they see fit. Positive comments about firms nearly always revolve around the issue of independence. Leave 'em alone, and they're happy.

Of course, brokers do need support. The lack of sales assistants is a perennial problem. And from what I hear, it's not getting better. The industry feels technology can replace sales assistants to some degree. There may be some truth to that, but only if you don't see the industry moving toward full-service planning and consulting via fee-based teams, with assistants as an integral part of the process.

All the firms espouse a version of this vision. Yet financial planning, multiple product lines and managed accounts create more paperwork, require more meetings and presentations, and generally require more ongoing service. Senior execs and bean counters don't seem to understand that support costs must rise as service levels rise. Management cannot expect the transactional-business cost structure (the million-dollar commission-based broker who operates with half an assistant) to carry over to the "selling" of advisory accounts and planning services.

To meet future challenges, firms must cut corporate overhead and redirect those dollars into the field.

Untie Those Tongues! Complicated rules and a hidebound SEC are inhibiting effective client communications.

Here's the problem: The market is in turmoil and you want to send a timely mass e-mail or fax to your clientele. Nice idea, but forget it. An identical message sent to multiple clients is "sales literature," according to the NASD. It requires preapproval by your compliance department and/or the NASD itself. The NASD and the industry are pushing to ease this restriction, but the SEC isn't cooperating.

It's too bad that while the SEC spends its time and the industry's money hosting Town Hall meetings for investors, the brokers who actually know these investors can't communicate efficiently with them.

It's time for the agency to move into the millennium and let brokers advise and educate their clients.

I was pleased to hear Stanley O'Neal, president of Merrill Lynch's retail operation, say the firm is striving to be "broker-centric."

At a November press conference at the SIA's annual meeting in Boca Raton, Fla., O'Neal compared Merrill's strategy to Home Depot's approach, in which its headquarters exists to serve the stores in the field. Financial consultants are the "center of [Merrill's] business," O'Neal emphasized to reporters.

O'Neal also said firms must offer clients choices. "The debate is over ... and the client won," he said. "Clients will do business with us in any way they choose to do business."

Well, almost. I asked O'Neal if Merrill was thinking of ending its practice of suing defecting brokers and freezing the accounts of clients who request transfers.

"I don't think we're contemplating that at all," O'Neal said.

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