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Nov 15, 2005 11:34 am

New to the game guys.


Do these small brokerage firms for example SW Bach make more money or do real firms like Salomon/Merill/Lehman make more commissions?


Also are those small wannabes firms safe to even work with?


Nov 15, 2005 12:52 pm

Remember Refco?

Nov 15, 2005 2:30 pm

Reg Rep has an annual rep on broker payouts.  You might be able to find it in the archives site.

Nov 16, 2005 11:19 am

Often times at the smaller firms your payout ratio is negotiable. 
If you need the backing or mental stability of a national firm, the
smaller guys aren't going to be your cup of tea.  They are more
for people who think bigger is stronger and better.  Smaller firms
usually offer a little more flexibility and a higher payout but limit
other benefits.



It's all to what you prefer.



A friend of mine is 36 and has worked at a national firm for 10+ years
and can't imagine stepping down to a regional or independent - thinks
it is a major step back.  His vacation time is very limited
because he's constantly working to generate his monthly and quarterly
quotas which he sees as a good thing to keep him honest.



I'm 38 and own a good part of my b/d, earn 50% of all fees and
commissions (plus a profit bonus) and have an agreement to own all of
the firm within 10 years.  I take a vacation in the spring and a
vacation in the fall and routinely take time off when the weather is
nice. 



It's all in your mindset.  Some people like working at smaller
firms, some like working at international conglomerates. 

Nov 16, 2005 11:34 am
skeedaddy2:

Remember Refco?



ummm....Refco was a very large commodities firm(including commodities brokerage), not a "smaller retail investment brokerage....."



You need to bone up on your industry knowledge if you're going to toss out comments like that, bro....

Nov 16, 2005 1:54 pm

I'm not on a mission to impress everyone on this forum with my extensive industry knowledge (going on 12 years). 


The point to be taken was how "safe" the smaller firms are vis-a-vis the majors regardless of their specialty. I could have easily mentioned Drexel Burnham Lambert or Kidder Peabody, but they weren't in the press lately.


Take care.


Nov 16, 2005 6:12 pm

Just about any firm that puts capital at risk in a trading strategy is
at risk of blowing up.  What was the English bank that had the
Hong Kong trader who blew it up?  There is a long line of firms
that have blown themselves up and I wouldn't say being large is always
going to make it stronger.



Just look at the secondary names on every brokerage firms and my guess
is 1/2 were desperate for a merger because of these problems. 
Bache is one!

Nov 16, 2005 7:27 pm

The name of the UK bank is Barings. You are correct....there's a saying that

you're only as good as your last trade. Bear Stearns, Lehman and Goldman

are all big on market making and carry huge overnight inventories. I think

one difference for these firms is that they have multiple layers of risk

management techniques like repos, hedges and arbitrage.



Being small means that you pretty much have one main business and that

puts you at risk if that business dries up. I think it is a vulnerable position

to be in.



Nov 17, 2005 11:54 pm
skeedaddy2:

I'm not on a mission to impress everyone on

this forum with my extensive industry knowledge (going on 12 years). [/

P]

The point to be taken was how "safe" the smaller firms are vis-a-vis the

majors regardless of their specialty. I could have easily mentioned Drexel

Burnham Lambert or Kidder Peabody, but they weren't in the press lately.



Take care.







How about E.F. Hutton anyone?

Nov 18, 2005 12:08 am
skeedaddy2:

I'm not on a mission to impress everyone on this forum with my extensive industry knowledge (going on 12 years). 


The point to be taken was how "safe" the smaller firms are vis-a-vis the majors regardless of their specialty. I could have easily mentioned Drexel Burnham Lambert or Kidder Peabody, but they weren't in the press lately.


Take care.





Neither Drexel nor Kidder were small, though perhaps not the top tier players.


Drexel basically got caught trying to corner the market in the high yield bond biz....from what I understood.

Nov 18, 2005 12:50 am

E.F. Hutton was at one time the second largest brokerage in the US, yet

they were done in by, of all things, "check kiting", and laundering money

for the Mob!!!

Nov 18, 2005 7:14 pm

Visigoth: E.F. Hutton was at one time the second largest brokerage in the US, yet they were done in by, of all things, "check kiting", and laundering money for the Mob!!!


-----------------------------------------


For those born before Carter took office: Remember the old commercial, "When E.F. Hutton talks, people listen."?