Merrill Lynch or Wachovia Securities?

I’d head for the bank.  I know a lot a people in this biz.  I know 1 new/new guy who has made it at ML.  And, he had a rather impressive insurance background and loads of contacts before joining.  No one else has been able to bring in enough “high net worth” clients to feed their family.

Sooth is dead right. Make sure the bank will put enough prospects before you.

Most banks are looking for seasoned reps.

I think you have to head to the bank and work their leads.  At the very least you have a steady stream of customers (don’t kid yourself, at a bank that is what they are) walking in the door.  At Merrill, you will be banging your head against the DNC list forever.

5 posts and nobody has bad mouthed the bank or “bank brokers”.  This has to be a forum record.

Wachovia Securities is NOT a bank brokerage.

[quote=RLYesq]

Wachovia Securities is NOT a bank brokerage.

[/quote]

Depending on where you work within Wachovia Securities it is.  They have an independent channel as well.

I should know.  I used to work IN the bank with Wachovia Securities.

Note the tag line.

Lets say you are good at gathering assets…  Leads are great from the bank but you could live without them.  Are you still saying the bank is better?

bank is a good place to start and learn…you can take off the training wheels later when you want to be a REAL financial advisor and not just a captive sales rep…

Which channel is the starter of this thread looking at working at?  Tradional wirehouse,independent or the bank side.

Wow where is Stanbrown?

Doesn't he want to tell you how bad it is.  I read a post somewhere that an office of 30 wirehouse guys brought in a total of 19 high net worth accounts last year, I am pretty sure it said it was a ML office (HNW 250K+)  Pretty sad since I did better than that by myself.  Go to the bank, just make sure it is a good one.

PS

Stan I haven't sold a fixed annuity in 1.5 years

bankrep1

LOL, haven't sold one in 1.5 years? You're a constant contradiction, pal.

I've been silent on this one for two reasons;

1) The conversation has been about where a new guy (w/o connections) should start, not the standard "I'm at a bank and I'm a 100% real broker doing the same job as the wirehouse guys" nonsense. Given that situation starting at a bank isn't the end of the world.

2) Joedabroker already hit the ball out of the park with his "captured sales rep" post.

Stan

I would argue I do a better job than a typical wirehouse rep.  I look at the clients insurance needs, (Disability, life and LTC), help them with estate planning (ILIT's and CRT's) and with their everyday investments.  I also provide advice on employee stock options exercise, restricted stock and alot of other things.  How many wirehouses brokers know 2 things about any of these subjects? 

I was jerking your chain a bit before.  Although I would still recommend a fixed annuity to a saver any minute of any day.

[quote=bankrep1]

Wow where is Stanbrown?

Doesn’t he want to tell you how bad it is. I read a post somewhere that an office of 30 wirehouse guys brought in a total of 19 high net worth accounts last year, I am pretty sure it said it was a ML office (HNW 250K+) Pretty sad since I did better than that by myself. Go to the bank, just make sure it is a good one.

PS

BankRep1,

But the branch did produce $8 Million+ from existing Assets and new smaller accounts.

Like it or not, the biggest Producers in this game mostly hang out at the wires, especially Merrill.

Sonny

Sonny that only approx 400k/ broker, that is not all that impressive, especially since on another thread someone was saying how great ML is and they average 712k/yr and in NYC over 1mm.  Sorry just being a little sarcastic about ML not a huge fan of their brokers around me.

I don’t care what you have to say about ML, I resigned last week.

Sonny -



What is next for you after your experience at ML? Are you looking for a
bank, or something like ML where the requirements are not as steep.
Thanks and good luck.

[quote=SonnyTheBull]BankRep1,
But the branch did produce $8 Million+ from existing Assets and new smaller accounts.
Like it or not, the biggest Producers in this game mostly hang out at the wires, especially Merrill.
Sonny[/quote]

Sonny....8 mil per year for an entire wirehouse branch in NYC?  They're pikers in the NYC wire market.  Google "Ron Carson".  He and his employees did 5 mil in friggin Omaha Neb!!!!

[quote=stanwbrown]

bankrep1

LOL, haven't sold one in 1.5 years? You're a constant contradiction, pal.

I've been silent on this one for two reasons;

1) The conversation has been about where a new guy (w/o connections) should start, not the standard "I'm at a bank and I'm a 100% real broker doing the same job as the wirehouse guys" nonsense. Given that situation starting at a bank isn't the end of the world.

2) Joedabroker already hit the ball out of the park with his "captured sales rep" post.

[/quote]

thx stan.  many props to ya buddy! ;-)  *bows*

[quote=bankrep1]

Stan

I would argue I do a better job than a typical wirehouse rep.  I look at the clients insurance needs, (Disability, life and LTC), help them with estate planning (ILIT's and CRT's) and with their everyday investments.  I also provide advice on employee stock options exercise, restricted stock and alot of other things.  How many wirehouses brokers know 2 things about any of these subjects? 

I was jerking your chain a bit before.  Although I would still recommend a fixed annuity to a saver any minute of any day.

[/quote]

Dude-

If that's really how you do things, you do a bit better than the average wire rep, and WAY better than the average bank rep.  I've seen the crap that I've transferred from bank brokers over the years, and the other stuff that they BURIED and I couldn't transfer without killing the client with surrendur charges and such.

If in fact that is how you run your business, props to ya.  But, compared to the normal bank rep, you are the exception that proves the rule! 

[quote=Nomba] Sonny -

What is next for you after your experience at ML? Are you looking for a

bank, or something like ML where the requirements are not as steep.

Thanks and good luck.

[/quote]

I am starting at AXA this Monday. Sell Some Insurance along with the usual.

Thanks

Sonny

[quote=SonnyTheBull] [quote=Nomba] Sonny -
What is next for you after your experience at ML? Are you looking for a
bank, or something like ML where the requirements are not as steep.
Thanks and good luck.
[/quote]
I am starting at AXA this Monday. Sell Some Insurance along with the usual.
Thanks
Sonny[/quote]

go to bed you crazy mofo....gotta get your rest to be a future tgp!

[quote=bankrep1]

Stan

I would argue I do a better job than a typical wirehouse rep. 

[/quote]

Of course you would. That's why I enjoy laughing at you 

"I look at the clients insurance needs, (Disability, life and LTC), help them with estate planning (ILIT's and CRT's) and with their everyday investments.  I also provide advice on employee stock options exercise, restricted stock and alot of other things.  How many wirehouses brokers know 2 things about any of these subjects? "

You're joking, right? Any wirehouse broker with any time in the biz can do anything you mentioned and with better tools than any credit union sales rep can.

"I was jerking your chain a bit before.  Although I would still recommend a fixed annuity to a saver any minute of any day."

Of course. Just another reason I find you so enjoyable 

"You're joking, right? Any wirehouse broker with any time in the biz can do anything you mentioned and with better tools than any credit union sales rep can. "

Stan you know that the majority of wirehouse reps aren't doing any of that, when I took the CFP, I was talking to a couple wirehouse reps who thought a VA death benefit was tax free because it was insurance.  Just to show you how ignorant some people are this was team a team of 3 from Smith Barney all 3 thought it true.  I was sitting back laughing at them. 

Definatley ML.  You always have a choice to transfer out to a bank.  But they do provide some of the best sales and investment training in the industry.  It’s really hard to transfer out of a bank…

"Stan you know that the majority of wirehouse reps aren't doing any of that...."

I couldn't tell if the majority are or are not. I DO know wirehouse reps with any real experience ARE, and they have better training and products available to them than any credit union sales reps does.

[quote=ABCD]Youre getting started:  Do you start with ML and take
the 18-24 months salary and start birddogging it?  or do you head
to the bank and work their leads?[/quote]



I wouldn’t go with the bank, but certainly wouldn’t go with Merrill Lynch.



Your income will be limited at a bank, and you usually can’t take clients with you when you leave.



Merrill Lynch is pure EVIL.  Not Merrill Lynch brokers, but the
company itself–especially the evil investment banking sided that
fcked their brokerage division by issuing bogus research reports.



Imagine that, the investment banking side totally fcks the brokerage
side of the business so they can make a few bucks.  Shameful.



How many of Merrill’s “buy” recommendations went bankrupt?



Enough said.

The comments regarding Merrill are ridiculous.



First, it is true that the firm got caught up in a bad research
scandal, but the American public has the attention span of a tse-tse
fly so that scandal has virtually no repurcussions.



As for Wachovia Securities.  It has NOTHING to do with the bank,
other than corporate governance.  The firm is a combination of
half a dozen great firms–merged into a mega force in this
business.  It is NOT a bank based B/D it’s an old line,
traditional wirehouse, owned by a bank just like PaineWebber is owned
by UBS, Solly is owned by Citibank, Alex Brown by Deutsche Bank, and so
forth.  One of  these days Merrill may become a division of a
European bank–AG Edwards almost certainly will–and when that happens
they will still be the great firms they are now…

"First, it is true that the firm got caught up in a bad research scandal..."

It's that the scandal that most every firm had to chip into the settle and then had to provide outside research? As I recall they called it the "Global Settlement" in recogintion of the fact that it was industry wide?

"As for Wachovia Securities.  It has NOTHING to do with the bank, other than corporate governance."

Well, there is an element of Wachovia Securities that does work inside the bank branches...

[quote=Put Trader]The comments regarding Merrill are ridiculous.

[/quote]



Not in the least.  Everything said about Merrill has been true.

[quote=Put Trader]

First, it is true that the firm got caught up in a bad research
scandal, but the American public has the attention span of a tse-tse
fly so that scandal has virtually no repurcussions.

[/quote]



That much is true, luckily for the Merrill reps who’ve built their
careers at Merrill.  Fortunately, they’ve suffered little damage,
if any, to their production from this heinous crime.



Would you eat at a restaurant that knowingly and purposely served customers spoiled, tainted food?



It boggles the mind that anyone would invest with Merrill Lynch, given their track record of fraud and self-dealing behavior.



I’m also surprised that there wasn’t a mass exodus of brokers from
Merrill Lynch.  None of the fraud that occurred came from the
private client group, but from crooks on the banking side.



All’s well that ends well, at least for Merrill reps.

[quote=stanwbrown]

“First, it is true that the firm got caught up in a bad research scandal…”

It's that the scandal that most every firm had to chip into the settle and then had to provide outside research? As I recall they called it the "Global Settlement" in recogintion of the fact that it was industry wide?
[/quote]

Not every investment firm had to pay in to that "global settlement".

And just because everybody else is a crook, it doesn't mean it's right for you to be one.

Regardless of what this Inquisitive soul has to say the fact is that
"Mother Merrill" is the premier brokerage firm in the world.



Every day several hundred people wander into their branches across the
world and open accounts–the only reason that individual chose Merrill
was because they had heard of it and they have an office nearby.



It is the one wirehouse that brokers find leaving to be a challenge
because clients have some odd idea that they have some sort of status
symbol because they have an account at Merrill.  In other words,
Merrill brokers find their customers often say, “Thanks for letting me
know you’re moving to UBS…I"m going to stay at Merrill” far more
often than happens anywhere else.



The reality is if a broker from (say) UBS phoned a client to say, “I’m
going to move my practice to Merrill Lynch I hope you’ll transfer your
account to them…” that call will be met with great enthusiasm.



A sad reality to a lot of guys who plan to move to Merrill is that they
find that their clients also have an account there–and intend to
continue to do business with their longtime Merrill broker. This 
means that the guy who left (say) Wachovia because he got a deal at
Merrill often finds that some of their better clients have a loyalty to
a Merrill broker already.



People sneer about the biggest player on the field–but sneering does little to win the game.

"Not every investment firm had to pay in to that "global settlement"."

Name a wirehouse that didn't. You throw the term "crook" around too loosely. Obviously Mother Merrill gave you your walking papers at some point.

"Every day several hundred people wander into their branches across the world and open accounts--the only reason that individual chose Merrill was because they had heard of it and they have an office nearby."

Yes...and every day millions of people say "Yes" when asked "Would you like to supersize that?", and yet it doesn't mean that McDonalds is the world's finest restaurant chain, just one of the biggest.

"It is the one wirehouse that brokers find leaving to be a challenge because clients have some odd idea that they have some sort of status symbol because they have an account at Merrill.  In other words, Merrill brokers find their customers often say, "Thanks for letting me know you're moving to UBS......I"m going to stay at Merrill" far more often than happens anywhere else."

Of course, and broad usage of proprietary products such as MLAM funds and your newly incarnated "Hedge Access" wouldn't have anything to do with that, right?  And the fact that brokers comp packages include a generous portion of 'deferred com', which others know as 'golden handcuffs'?  I wonder how great their payout looks if you boil it down to CASH ON THE BARRELLHEAD!

[quote=Put Trader]The comments regarding Merrill are ridiculous.

First, it is true that the firm got caught up in a bad research scandal, but the American public has the attention span of a tse-tse fly so that scandal has virtually no repurcussions.

As for Wachovia Securities.  It has NOTHING to do with the bank, other than corporate governance.  The firm is a combination of half a dozen great firms--merged into a mega force in this business.  It is NOT a bank based B/D it's an old line, traditional wirehouse, owned by a bank just like PaineWebber is owned by UBS, Solly is owned by Citibank, Alex Brown by Deutsche Bank, and so forth.  One of  these days Merrill may become a division of a European bank--AG Edwards almost certainly will--and when that happens they will still be the great firms they are now..
[/quote]

Wow....I've been watching your 'know-it-all' posts for a few days now whilst biting my tongue, but I guess I've just had enough of your lording your opinions over us like we're just a bunch of mere peasants.  Glad to hear that you have it all figured out.

I would, however, like to hear you explain exactly how you figure AGE will become a divisiion of a European bank when

1.  None of their advisors are under contract, with the exception of trainess.  They could all walk out the day after a takeover closes.

2.  Large portion of stock held by family and employees.

3.  Another large(long time) friendly shareholder in Mass Mutual.

Don't you wonder why they've not been in play before?

Inquisitive,

Wow, you are really running your mouth on Mother… Are you mad
because you got booted out of PDP after 9 months??? Or you keep losing
your best clients to Mother?? Or are you upset because you know that
the average Merrill broker is probably more intelligent and successful
than you… Theres a reason Merrill’s brokers on average produce around
750K a year, while the 2nd place team is Solly, coming in near 500K…
Stop waiting outside ML’s office on bended knee looking for a job…
I will send you a big red lollipop instead… with a bow on it…

[quote=joedabrkr]

Of course, and broad usage of proprietary
products such as MLAM funds and your newly incarnated “Hedge Access"
wouldn’t have anything to do with that, right?  And the fact that
brokers comp packages include a generous portion of ‘deferred
com’, which others know as ‘golden handcuffs’?  I wonder how great
their payout looks if you boil it down to CASH ON THE BARRELLHEAD!

[quote=joedabrkr]

Wow....I've been watching your 'know-it-all' posts for a few days now whilst biting my tongue, but I guess I've just had enough of your lording your opinions over us like we're just a bunch of mere peasants.  Glad to hear that you have it all figured out.

I would, however, like to hear you explain exactly how you figure AGE will become a divisiion of a European bank when

1.  None of their advisors are under contract, with the exception of trainess.  They could all walk out the day after a takeover closes.

2.  Large portion of stock held by family and employees.

3.  Another large(long time) friendly shareholder in Mass Mutual.

Don't you wonder why they've not been in play before?

"The reality of the US securities industry is that it is exceptionally cash intensive--and becoming a division of a bank is a natural progression that all of the major firms will sucumb to sooner or later."

If you had said that to me as recently as six months ago, I would have agreed. Now I'm not quite so sure. Citi's been told by regulators to not even think about more acquitions until they get their current operation in order, and I've yet to see any other bank/brokerage marriages work out as planned. In fact, Citi's already killed their attempt at a full service brokerage/bank/insurance giant by selling off Travelers.

It may be the bank/brokerage mergers we've seen are little more than a cycle that can reverse.

",…cylce that can be reversed."



Why would it be good if the trend were reversed?  Having access to
capital is critical, and it matters not where that capital comes from.



Is there a top tier firm other than Merrill and Edwards that is not already dancing with a bank?



What does Citi Group being told that they cannot buy another brokerage
firm have to do with Merrill or Edwards accepting an offer from a bank?



If you’re in production at Merrill or Edwards how will your life change
if there is a change in ownership of the firm?  In many ways a
producer is like a professional athlete–he plays the game and doesn’t
really care who owns the team as long as he gets paid.



Finally, the reason there is very little movement among the big hitters
at the major firms is because they know that the grass is the same
color on the other side of the fence.  A producer at a top tier
firm has “arrived” and there is basically nowhere else to go.

[quote=rightway]

The deferred comp makes us wealthy- how is that bad again?  I just
don’t see why you all think ML indoctrines its advisors into some
"evil" practices.  Its a huge B/D, and if 5% of the registered
reps are bad- ML will have more than anyone else in numbers…ML has
nothing to do with that in practice.

[/quote]



Deferred comp is bad because it greatly reduces your ability to leave without suffering adverse financial consequences.



Brokerage firms did NOT push deferred comp down people’s throats because it wasn’t good for the firms.



Deferred comp is solely designed to limit reps, not help them.  A
successful rep can get wealthy just fine without having his
compensation deferred.



Deferred comp is going to be much cheaper than forgivable loans.  That’s for sure.



These firms can do whatever they want, whenever they want.  They
can slash your payout (which they will), they can cut support (which
they have), and they can start adding all sorts of fees for this and
for that which can cost several grand a month.



NEVER think that any firm is looking out for your interests.  You are in for a rude awakening if you do. 



The big players tend to move together, with ML leading the way.



How confident are you that you could take your assets out of ML?  Will your clients follow you?



Hey, if you’re happy with absolutely no options and having your career
held captive by senior management, then that’s fine.  But you
can’t put a price on freedom.  And freedom includes the ability to
pick up and go to the firm across the street.  Without freedom,
you are an indentured servant.



(By the way, I never said that ML reps were bad.  Not at
all.  However, I will say that the management is evil. 
Especially the investment banking side.)

[quote=Put Trader]",,....cylce that can be reversed."

Why would it be good if the trend were reversed?  Having access to capital is critical, and it matters not where that capital comes from.

Is there a top tier firm other than Merrill and Edwards that is not already dancing with a bank?

What does Citi Group being told that they cannot buy another brokerage firm have to do with Merrill or Edwards accepting an offer from a bank?

If you're in production at Merrill or Edwards how will your life change if there is a change in ownership of the firm?  In many ways a producer is like a professional athlete--he plays the game and doesn't really care who owns the team as long as he gets paid.

Finally, the reason there is very little movement among the big hitters at the major firms is because they know that the grass is the same color on the other side of the fence.  A producer at a top tier firm has "arrived" and there is basically nowhere else to go.
[/quote]

Access to capital is critical?  Hmmm....on the retail end of the business I actually perceive this business to be pretty 'asset light'....and feel that you only need access to capital if:

1.  You are going to get involved in the creation and distribution of proprietary product.  (Note AGE does not do so, and their ROA is quite high!)

2.  You plan on blowing tons of dollars on showy branches and expensive headquarters buildings in Manhattan and other major cities(again look at AGE....Ben always used to say that we owned our HQ for the cost of a year's rent in Manhattan.)

3.  You have a bunch of overpaid I-Bankers putting your firm's capital at risk on an ongoing basis.

4.  You dump a lot of capital into your trading desks so that your committed traders can trade against customer order flow....for the benefit of the firm...

Just one humble man's vaguely informed opinion.....enlighten me if you disagree.

[quote=joedabrkr]

Access to capital is critical?  Hmmm…on the retail end of the
business I actually perceive this business to be pretty ‘asset
light’…and feel that you only need access to capital if:

1.  You are going to get involved in the creation and distribution of proprietary product.  (Note AGE does not do so, and their ROA is quite high!)

2.  You plan on blowing tons of dollars on showy branches and expensive headquarters buildings in Manhattan and other major cities(again look at AGE....Ben always used to say that we owned our HQ for the cost of a year's rent in Manhattan.)

3.  You have a bunch of overpaid I-Bankers putting your firm's capital at risk on an ongoing basis.

4.  You dump a lot of capital into your trading desks so that your committed traders can trade against customer order flow....for the benefit of the firm...

<>

Just one humble man’s vaguely informed opinion…enlighten me if you disagree.</>

[/quote]



Regardless of what is done with the capital, it is critical to have it.



Your item 4–trading desks–is a good example.  The more capital a
firm has the more markets it can make.  Perhaps you can share with
us why it is bad for a firm to trade for its own benefit?



Perhaps you can explain why it’s bad to have buildings in
Manhattan?   That AGE chooses to office in St. Louis is
actually redundant.



There is so much more  to this business than retail branches, and
as a result firms like Edwards have hundreds–perhaps thousands–of
people in jobs in and around Manhattan.



As for fancy buildings.  Perhaps you can explain why it is wrong
to house your business in a showplace building in Manhattan. 
Quite often the landlords will give a premier Wall Street firm a year
or more of free rent in order to lure them.  The city is known for
cutting tax benefits in order to keep New York as the financial center
of the world.



Surely you’re not going to suggest that Ben Edwards is right and dozens of other bright leaders of other firms are all wrong?



Proprietary products are not all that cash intensive–it’s the ability
to participate in syndicates of all types that requires the
bucks.  On any given day there are dozens of deals being
worked–and managers telling brokers who then tell customers, “We can’t
get any of that…” is never good.

> ",,....cylce that can be reversed."

"Why would it be good if the trend were reversed?  Having access to capital is critical, and it matters not where that capital comes from."

I didn't say it would be good, I said I wasn't so sure it was the wave of the future any longer. This wouldn't be the first industry to go through a merger mania and a conglomeration phase only to see it all spun apart again. Also, I wouldn't be so sure banks are the capital source for retail brokerage that you might think. The same was said of insurance companies and that idea's already passed.

"Is there a top tier firm other than Merrill and Edwards that is not already dancing with a bank?"

Morgan Stanley. (BTW, AGE is a fine firm, but being centered out in StL, I wouldn't call it top tier. Jmho)

"What does Citi Group being told that they cannot buy another brokerage firm have to do with Merrill or Edwards accepting an offer from a bank?"

Nothing, but it does demonstrate the problems with integration.

"If you're in production at Merrill or Edwards how will your life change if there is a change in ownership of the firm? "

Not much, I would assume.

"Finally, the reason there is very little movement among the big hitters at the major firms is because they know that the grass is the same color on the other side of the fence.  A producer at a top tier firm has "arrived" and there is basically nowhere else to go."

I think you might want to rethink that one. I see a great many top producers (multi-million) and their teams moving between the top three (ML, SB and MS).

[quote=stanwbrown]



“Finally, the reason there is very little movement among the big
hitters at the major firms is because they know that the grass is the
same color on the other side of the fence.  A producer at a top
tier firm has “arrived” and there is basically nowhere else to go.”

I think you might want to rethink that one. I see a great many top producers (multi-million) and their teams moving between the top three (ML, SB and MS).

[quote=Put Trader] [quote=joedabrkr]
Access to capital is critical?  Hmmm…on the retail end of the business I actually perceive this business to be pretty ‘asset light’…and feel that you only need access to capital if:

1.  You are going to get involved in the creation and distribution of proprietary product.  (Note AGE does not do so, and their ROA is quite high!)

2.  You plan on blowing tons of dollars on showy branches and expensive headquarters buildings in Manhattan and other major cities(again look at AGE....Ben always used to say that we owned our HQ for the cost of a year's rent in Manhattan.)

3.  You have a bunch of overpaid I-Bankers putting your firm's capital at risk on an ongoing basis.

4.  You dump a lot of capital into your trading desks so that your committed traders can trade against customer order flow....for the benefit of the firm...

  <>
Just one humble man's vaguely informed opinion.....enlighten me if you disagree.
[/quote]

Regardless of what is done with the capital, it is critical to have it.

Your item 4--trading desks--is a good example.  The more capital a firm has the more markets it can make.  Perhaps you can share with us why it is bad for a firm to trade for its own benefit?

Perhaps you can explain why it's bad to have buildings in Manhattan?   That AGE chooses to office in St. Louis is actually redundant.

There is so much more  to this business than retail branches, and as a result firms like Edwards have hundreds--perhaps thousands--of people in jobs in and around Manhattan.

As for fancy buildings.  Perhaps you can explain why it is wrong to house your business in a showplace building in Manhattan.  Quite often the landlords will give a premier Wall Street firm a year or more of free rent in order to lure them.  The city is known for cutting tax benefits in order to keep New York as the financial center of the world.

Surely you're not going to suggest that Ben Edwards is right and dozens of other bright leaders of other firms are all wrong?

Proprietary products are not all that cash intensive--it's the ability to participate in syndicates of all types that requires the bucks.  On any given day there are dozens of deals being worked--and managers telling brokers who then tell customers, "We can't get any of that...." is never good.
[/quote]

Why is it bad to have a firm trade for its'  own account?

For starters, it's risky.  Goldman is about the only one who has been able to do it successfully with any consistency.  Secondly-it often means they're taking positions exactly opposite to that of the client....a built in conflict of interest.

Is there anything wrong with having a firm HQ in a showplace buildilng in Manhattan?  pffffft......only if you enjoy overspending, I suppose.  That one year's free rent is a drop in the bucket compared to what firm's spend in NYC compared to other locales.

"No doubt there is movement, but relative to the number of big hitters and their teams that could be in play relatively few move around--especially more than once."

I don't know how to quantify something like that, be there surely is movement, and the firms are paying big buck to getting them.

[quote=joedabrkr]

Why is it bad to have a firm trade for its’  own account?

For starters, it's risky.  Goldman is about the only one who has been able to do it successfully with any consistency.  Secondly-it often means they're taking positions exactly opposite to that of the client....a built in conflict of interest.

Is there anything wrong with having a firm HQ in a showplace buildilng in Manhattan?  pffffft......only if you enjoy overspending, I suppose.  That one year's free rent is a drop in the bucket compared to what firm's spend in NYC compared to other locales.

"There is no conflict of interest in being on the other side of the market from a customer unless you are recommending that the customer take what you see as the wrong position."

Gee, I think the odds of that (that the client owns what was recommended to them) are pretty good when we're talking about brokerage firms.

You mentioned capital needs to have the ability to participate in syndicates . Doesn't it sort of undermine your position about brokerages needing banks when the biggest players in this field are all "bank free"?

[quote=stanwbrown]

“There is no conflict of interest in being on
the other side of the market from a customer unless you are
recommending that the customer take what you see as the wrong position.”

Gee, I think the odds of that (that the client owns what was recommended to them) are pretty good when we're talking about brokerage firms.

You mentioned capital needs to have the ability to participate in syndicates . Doesn't it sort of undermine your position about brokerages needing banks when the biggest players in this field are all "bank free"?

"It sounds like you're a penny stock whore who has come to grips with the reality that you're really nothing more than a soldier in a crime family--that's good, self realization is good for the soul."<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

WTF are you babbling about? Obviously you’re deeply confused.

"However, if you had reputable firm experience you'd understand that real brokerage firms do not take the other side of the trade for any length of time."

Oh, so it's ok to recommend a stock to the firm's clients, and then take a position against it, so long as you only do it for a brief period? LOL Look, I don’t have a problem with firms doing proprietary trading so long as they never take a position contrary to what they’ve recommended to their clients. Clear enough?

"  The vast majority of trades in this business are not the "pump and dump" scams that color your point of view."

You need a program pal, clearly you can't keep the players straight without one...

"Reputable firms do not issue favorable research and then engage in short sales to accomodate customer buy orders."

Huh, I would hope not.

"As for the comment about the need for banks in order to engage in underwritings.
It is true that "bank free" firms such as Merrill are major players in the investment banking arena--but their successes are not because they have no ties to banks, it's inspite of the lack of ties to banks."

Is that right? Seems to me the biggest players in IB, MS, Goldman, ML are all bank free and have been leaders in the field for decades. OTOH, SB, with Citi behind it, a decade later still trails in IB business. UBS isn’t even on the map. Doesn't sound like "inspite of" to me.

"The other day I asked how the average Joe and Joanne broker's life changes if they wake up one day and hear that their B/D was acquired by The Bank of Sweden.  What I heard was nothing--so I assume that it is agreed that there will be no change."

I never said I thought there were be a change, although I've since heard from others that they did, in fact, see a change. They report an end of Entrepreneurial spirit, but I’ll leave it to them to support their comments.

"Arguing that bank ownership negatively affects any tier of the business is as specious as arguing that it's better to not be a member of a rich family--there is no way having more money can be portrayed as a negative."

Some how you drew all those comments based on things I didn't say or didn't disagree with. I never said it would negatively effect anything. I’m not particularly sure one way or another on that aspect of it.  My point is that several years ago it seem inevitable that banks, brokerages and insurance companies would combine. Now, I would say that doesn't seem so sure a thing. Citi's had a tough time integrating their enterprise, to the point where regulators have said "no more for now". They sold off their insurance arm, and the only player I can think of that's recently been bank bought was Paine Webber, never a powerhouse to begin with.

[quote=stanwbrown]Oh,
so it’s ok to recommend a stock to the firm’s clients, and then take a
position against it, so long as you only do it for a brief period? LOL
Look, I don’t have a problem with firms doing proprietary trading so
long as they never take a position contrary to what they’ve recommended
to their clients. Clear enough?<o:p></o:p>[/quote]



Acme B/D has issued a buy recommendation for XYZ–a top tier NASDAQ issue with plenty of float.



Is Acme behaving illegally if Acme fills Acme client buy orders from an inventory position?



They’re selling to their clients who are buying–is that prima facia
evidence in your world of taking a position conntrary to what they’ve
recommended?  If a firm has a buy recommendation out do they have
to maintain a long position in the stock or is it acceptable to be flat
at the end of the day?



If you’re a position trader is it acceptable to go home short even though the stock is on the firm’s recommended list?

"Acme B/D has issued a buy recommendation for XYZ--a top tier NASDAQ issue with plenty of float.

Is Acme behaving illegally if Acme fills Acme client buy orders from an inventory position?"

Yes.

"They're selling to their clients who are buying--is that prima facia evidence in your world of taking a position conntrary to what they've recommended?"

Yes.

"  If a firm has a buy recommendation out do they have to maintain a long position in the stock or is it acceptable to be flat at the end of the day?"

If they have a buy, and they're trading for the house, they should be long as long as they have a buy to their clients on the same stock.

"If you're a position trader is it acceptable to go home short even though the stock is on the firm's recommended list?"

No. That's taking a position contrary to the good of your clients.

"Acme B/D has issued a buy recommendation for XYZ–a top tier NASDAQ issue with plenty of float.

Is Acme behaving illegally if Acme fills Acme client buy orders from an inventory position?"

Yes.

Then, how do you propose a firm honor its customer's orders?

++++++

"They're selling to their clients who are buying--is that prima facia evidence in your world of taking a position contrary to what they've recommended?"

Yes.

Nonsense.  A trading desk is there to fill client orders.  If the clients are buying it's the desk's job to sell the shares to the clients.

If the firm is shorting the shares to accomodate orders you could possibly argue a conflict of interest--but even then it would be a difficult case to make. The role of market maker involves going short at times.

+++++

"  If a firm has a buy recommendation out do they have to maintain a long position in the stock or is it acceptable to be flat at the end of the day?"

If they have a buy, and they're trading for the house, they should be long as long as they have a buy to their clients on the same stock.

Are you using the term "trading for the house" to mean market making?

+++++

<>“If you’re a position trader is it acceptable to go home short even though the stock is on the firm’s recommended list?”</>



<>No. That’s taking a position contrary to the good of your clients.



Nonsense–there are people who are buying and selling every day, which is why it’s a market.



A trader is charged with turning a profit for his desk–and if he
senses that the stock is going to downtick for the balance of the day
he has a duty to act on that belief.



Do you believe that a stock can pull back as a normal part of an overall upwards pattern?

</>

. “Acme B/D has issued a buy recommendation for XYZ–a top tier NASDAQ issue with plenty of float.Is Acme behaving illegally if Acme fills Acme client buy orders from an inventory position?”

>Yes.

"Then, how do you propose a firm honor its customer's orders?"

On the open market, not out of inventory.

>> "They're selling to their clients who are buying--is that prima facia evidence in your world of taking a position contrary to what they've recommended?"

>Yes.

"Nonsense.  A trading desk is there to fill client orders.  If the clients are buying it's the desk's job to sell the shares to the clients."

It isn't a trading desk's job to sell out of inventory only. If a firm has a buy on a stock they should be filling orders out of the open market, not inventory, as that's nothing more than touting a stock as a buy, while selling their own holdings in the same stock.

>If the firm is shorting the shares to accomodate orders you could possibly argue a conflict of interest--but even then it would be a difficult case to make. The role of market maker involves going short at times.

You're pretending there's no open market or other market makers. With any real fill there's no need to short to accomodate client buys.

>> "  If a firm has a buy recommendation out do they have to maintain a long position in the stock or is it acceptable to be flat at the end of the day?"

> If they have a buy, and they're trading for the house, they should be long as long as they have a buy to their clients on the same stock.

"Are you using the term "trading for the house" to mean market making?"

I'm talking about any proprietry trading the firm might be doing within their own accounts, ala Goldman, for example.

>>"If you're a position trader is it acceptable to go home short even though the stock is on the firm's recommended list?"

>No. That's taking a position contrary to the good of your clients.

"Nonsense--there are people who are buying and selling every day, which is why it's a market."

You're confusing "people" (the market as a whole) trading and a firm selling when they have a buy on the stock.

"A trader is charged with turning a profit for his desk--and if he senses that the stock is going to downtick for the balance of the day he has a duty to act on that belief."

A trader shouldn't be taking a position opposite what his firm's telling their clients to take. It's really pretty easy to understand. A firm can either recommend a buy or sell to clients on a stock and take the same position, or they can trade for a profit, changing their position as they see fit foregoing having a recommendation different than their own position to clients. They just can't do both at the same time.

"Do you believe that a stock can pull back as a normal part of an overall upwards pattern?"

Sure. That doersn't mean a firm that's got a "buy" on a stock to its clients should be attempting to profit from that move.

"Do you believe that a stock can pull back as a normal part of an overall upwards pattern?"

Sure. That doersn’t mean a firm that’s got a “buy” on a stock to its clients should be attempting to profit from that move.



Suppose Acme has a buy recommendation on XYZ.



If they change it to a hold, or a sell, do they have to wait for every
one of their clients to come out of their long position before they
come out of their own long position?



Do you have any experience other than as a wire operator?

>>"Do you believe that a stock can pull back as a normal part of an overall upwards pattern?"

>Sure. That doersn't mean a firm that's got a "buy" on a stock to its clients should be attempting to profit from that move.

"Suppose Acme has a buy recommendation on XYZ.

If they change it to a hold, or a sell, do they have to wait for every one of their clients to come out of their long position before they come out of their own long position?"

Of course not. Now, what does that have to do with a firm that has a recommendation to clients on a given stock profiting by taking the other side of the trade? Could there be a clearer example of a firm putting their own interests before those of their clients?

"Do you have any experience other than as a wire operator?"

No. I tune sports cars for a living and just found this forum by accident. What's your excuse?

It’s ridiculous to argue that a firm must speak with a unified
voice–what is a proprietary trader supposed to do if their technical
research suggests a stock is about to drop while their fundamentalists
believe it’s about to rally?



The term front running has several definitions–one of which is to
establish long positions in anticipation of a favorable research report.



Suppose Acme’s research department is preparing a major buy
recommendation on XYZ.  In previous generations there were no
rules against Acme establishing a large long position in order to have
inventory to accomdate the anticipated orders.



In the wake of the incredible fraud in the penny stock market of the
1980s the NASD addressed the issue and forbid such accumulation. 
That was too bad because some of these recommendations were so powerful
that the resulting buy orders caused rallies that resulted to mean that
the customers who bought had to pay more per share than they would have
had to pay if they had been buying from inventory.



Whiners whining about making a profit are notorious for generating unintended consequences that make things worse.

Whiners need to clarify what they’re whining about.  For example whining about proprietary trading and a firm’s research.



Suppose I am a proprietary trader and am long 1,000,000 shares of XYZ at $20 when my firm recommends the stock.



If the recommendation causes the stock to rally to $23 and I liquidated
my position into that rally how did my action harm the investors who
bought?



Is it not true that my overhanging supply tended to keep the price
lower, which benefited those who were buyng as a result of my firm’s
recommendation?

Perhaps you could explain to me how it's "whining" to point out that a firm should never put its own interests before its clients?

This is pretty much a no-brainer to me; if you tell clients to buy, no part of your firm should make money taking a position against your clients. In a larger view, that approach is little more than a grand pump and dump scheme.

This sort of "quit whining" excuse to cover for self dealing is just what puts the industry in a bad light with investors.

[quote=stanwbrown]

Perhaps you could explain to me how it’s
"whining" to point out that a firm should never put its own interests
before its clients?

This is pretty much a no-brainer to me; if you tell clients to buy, no part of your firm should make money taking a position against your clients. In a larger view, that approach is little more than a grand pump and dump scheme.

This sort of "quit whining" excuse to cover for self dealing is just what puts the industry in a bad light with investors.

[quote=joedabrkr]

firm trade for its’  own account?

For starters, it's risky.  Goldman is about the only one who has been able to do it successfully with any consistency. [/quote]

You know, when I heard Goldman's report that they thought oil could spike to $105/barrel, I got pissed as hell.  That bullsh*t instantly translates to higher prices at the pump, and detrimental effects to the American economy. 

Oh yeah, I hear Goldman is a big player in energy.  Yup, one of the tops in energy derivatives...

Nah, they wouldn't issue a bogus report to make some quick trading profits, would they?

They wouldn't recommend clients buy stocks in companies they make markets in either, would they?

[quote=inquisitive]

[quote=joedabrkr]

firm trade for its’  own account?

For starters, it's risky.  Goldman is about the only one who has been able to do it successfully with any consistency. [/quote]

You know, when I heard Goldman's report that they thought oil could spike to $105/barrel, I got pissed as hell.  That bullsh*t instantly translates to higher prices at the pump, and detrimental effects to the American economy. 

Oh yeah, I hear Goldman is a big player in energy.  Yup, one of the tops in energy derivatives...

Nah, they wouldn't issue a bogus report to make some quick trading profits, would they?

They wouldn't recommend clients buy stocks in companies they make markets in either, would they?

If we just take the trouble to read the Research Reports A thru Z, that brilliant analysts like Henry Blodget and Jack Grubman prepare, our clients and us will make a ton of money.

RightAway just admit it, Management’s and Investment Banking’s misdeeds have made Investors distrustful of Wall St. more than ever. This has hurt a lot of hardworking and competent brokers at the wirehouses.

It will take a while to earn Main St.'s trust again.

[quote=Put Trader] [quote=stanwbrown]

Perhaps you could explain to me how it's "whining" to point out that a firm should never put its own interests before its clients?

This is pretty much a no-brainer to me; if you tell clients to buy, no part of your firm should make money taking a position against your clients. In a larger view, that approach is little more than a grand pump and dump scheme.

This sort of "quit whining" excuse to cover for self dealing is just what puts the industry in a bad light with investors.

[/quote]

I'm not the fool who declared that filling a client's buy order is taking a position opposite to the client.

That idiotic logic can extend to every transaction in the street since by definition a buyer and a seller are on opposite sides of each trade.

Tell me, how does a customer lose if they buy a stock based on a firm's recommendation and the firm that made the recommendation sells the shares to the client.  How does the client lose?
[/quote]

Thank you Stan.  Couldn't have said it much better myself.

Put Trader, I like how you resort to terms like 'idiotic' and 'whining' when someone dares make a cogent argument that does not disagree with your world view.

If the position trader made the purchase of the stock because he had any advance knowledge of the research comment that moved the stock, or if he got the stock at a lower price and then sold it to the client at a higher price later that trading day because he was able to obtain the research more quickly and buy before the clients made their purchase, I would suggest it is an obvious conflict of interest.

If you dont' see that, Put Trader, you just don't get it on this issue.  Sadly, our industry is struggling with regaining the trust of the public because of too many folks who think like you do.

No offense intended, but it's merely my strong opinion. 

[quote=rightway] [quote=inquisitive] [quote=joedabrkr]

firm trade for its'  own account?

For starters, it's risky.  Goldman is about the only one who has been able to do it successfully with any consistency. [/quote]

You know, when I heard Goldman's report that they thought oil could spike to $105/barrel, I got pissed as hell.  That bullsh*t instantly translates to higher prices at the pump, and detrimental effects to the American economy. 

Oh yeah, I hear Goldman is a big player in energy.  Yup, one of the tops in energy derivatives...

Nah, they wouldn't issue a bogus report to make some quick trading profits, would they?

They wouldn't recommend clients buy stocks in companies they make markets in either, would they?

[/quote]

Goldman, Merrill, and the world for that matter has one purpose- to make our lives miserable.  Is that the case?  I could provide a pile of research reports from these two firms that DECREASED estimates, LOWERED expectations, and did everything to forwarn investors and advisors of possible dangers in the short run....but that doesn't fire you up so it would fall on deaf ears.  Your like the USA Today- you focus on bad news.  There is a lot of good things happening in the world of research, but you have to read the reports....the whole report...not just the Buy/Sell Hold on the front.  You don't get it, and you probably never will. 
[/quote]

You are so correct on that count, righty.  It consistently amazes me how many so-called professionals have no idea how to properly use research.  If you don't want to take the time to do it right, just stick with mutual funds!

[quote=inquisitive] [quote=joedabrkr]

firm trade for its'  own account?

For starters, it's risky.  Goldman is about the only one who has been able to do it successfully with any consistency. [/quote]

You know, when I heard Goldman's report that they thought oil could spike to $105/barrel, I got pissed as hell.  That bullsh*t instantly translates to higher prices at the pump, and detrimental effects to the American economy. 

Oh yeah, I hear Goldman is a big player in energy.  Yup, one of the tops in energy derivatives...

Nah, they wouldn't issue a bogus report to make some quick trading profits, would they?

They wouldn't recommend clients buy stocks in companies they make markets in either, would they?

[/quote]

You know....it may have resulted in higher prices at the pump but not for the barrel.  I remember hearing the news that morning, and thought "Hmmmm....Goldman's making an outrageous prediction like this....good sign this market has just about hit the top."  I sold my last oil service position out shortly thereafter, and it's about 5% lower already as of Friday's close.  Oil, meanwhile, is down about 10% since Goldman made their bold prediction.

Instead of getting angry, question what you see and think critically, mi amigo.

[quote=Put Trader] [quote=stanwbrown]

Perhaps you could explain to me how it's "whining" to point out that a firm should never put its own interests before its clients?

This is pretty much a no-brainer to me; if you tell clients to buy, no part of your firm should make money taking a position against your clients. In a larger view, that approach is little more than a grand pump and dump scheme.

This sort of "quit whining" excuse to cover for self dealing is just what puts the industry in a bad light with investors.

[/quote]

I'm not the fool who declared that filling a client's buy order is taking a position opposite to the client.

That idiotic logic can extend to every transaction in the street since by definition a buyer and a seller are on opposite sides of each trade.

Tell me, how does a customer lose if they buy a stock based on a firm's recommendation and the firm that made the recommendation sells the shares to the client.  How does the client lose?
[/quote]

1) I never "declared" that filling  a client's order was taking a position against the client. So long as you're filling the order from the open market, there's nothing wrong. OTOH, shorting a position the firm has a "buy" on, to fill an order OR selling out of inventory IS taking a position against a client you HAD recommended a "buy" to. There should be no reason to fill from inventory OR short to cover an order if we're talking about a reasonable float you you have recommended a "buy".

2) Every transaction does have a buyer and a seller, however, the firm shouldn't be the seller if they've recommended a "buy". They simply need to fill from the open market. I don't see why this is so hard for you to understand.

3) How does the client "lose"? They lose over the long run if they're dealing with a firm that puts its own profit before their client's interests.

Hello, thanks for your post. Your post is very informative and insightful. I was browsing the blogs because I am also trying to decide whether to go for the Financial Advisor in Training position with Wachovia or look at the FA training program with Merrill Lynch.  I was told by a friend who is an FA with JP Morgan Chase that bank is the way to go. But I from what some of the blogs are stating here is that Wachovia Securities is NOT always housed in a bank?  If this is the case, I much rather choose Merrill over Wachvia Securities FA position… If you have any additional information, please share them!