Instead of servicing hundreds of accounts, brokers who embrace technology will soon be servicing thousands--a shift that could drastically reduce the broker workforce, and dramatically reduce costs for firms, said several speakers at the Securities Industry Associations Internet Update Conference, held at the New York Hilton Jan. 20 and 21.
One of the key findings of our research is that the Internet will allow fewer brokers at full-service firms to serve more customers, better--and thats not necessarily a bad thing, said Julio Gomez, an expert on technology in the securities industry and founder of the consulting firm Gomez Advisors. Its an excellent thing for the corporation and shareholders in reducing operating expenses.
But will the Internet be a good thing for brokers? Gomez noted a general consumer movement away from middlemen. At the center of this movement is the broker, who has a God-given right to high compensation levels--just ask them, Gomez said. Will there be as many $100,000 brokers in five years as there are today, and should there be? he asked a panel of firm technology executives.
None answered the loaded question directly, but several weighed in on related matters. What technology, and particularly the Internet, does is allow a broker to be much more efficient, said Thomas OConnell, director of information technology and operations for Discover Brokerage Direct. Some of the senior brokers today that are million-dollar producers have only 200 accounts. A broker tomorrow, in order to make that kind of money, is probably going to have to serve 2,500 accounts.
Likewise, Stanley Witkowski, Prudential Securities director of strategic client initiatives, also echoed a commonly heard management mantra--the broker of tomorrow must move beyond transactions. That broker who is on the phone all day long giving quotes and signing dividend checks, hes an endangered species, Witkowski said.