2010 Looks Fairly Bleak For Brokers

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Jan 12, 2010 7:25 am

BROKER'S WORLD: 2010 Looks Fairly Bleak For Brokers



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By Annie Gasparro A DOW JONES NEWSWIRES COLUMN



NEW YORK (Dow Jones)--The markets may have bounced back, but the outlook for many financial advisers remains decidedly bleak.



Industry consolidation, hits to compensation, lost client assets and regulatory uncertainty all are still shaking up what was, not so long ago, a booming and lucrative profession. And then, of course, there are the cutbacks in perks that advisers once took for granted.



"There's still a lot of doom and gloom among brokers," said Matthew Bienfang, senior research director specializing in wealth management at TowerGroup, a financial-services research firm. "From a compensation standpoint, there are a lot of problems they are still facing."



Advisers at Morgan Stanley Smith Barney, Bank of America Corp.'s (BAC) Merrill Lynch and Wells Fargo Advisors are working their way through the joint ventures and acquisitions that reshaped the industry last year. UBS AG's (UBS) U.S. wealth-management group is adjusting to a new management regime and strategy.



All are having to find their way amid new management structures, revised pay scales and different fee schedules.



Hurt worst by the compensation changes are advisers who bring in less business, while top earners' pay was cushioned by the brokerages' efforts to keep them in the fold. "There is a shrinking pool of experienced advisers, so it is expensive to get them and to keep them," said Dennis Gallant, president of GDC Research, a financial-services consulting firm.



Gallant said he expects the industry's good times to return relatively quickly, as the economy does. "It's amazing how easily people forget," he said.



That may be little consolation right now, when losses in client assets continue to sting even some of the best brokers. While the rise in stocks has improved client accounts, many brokers saw clients simply walk away in the crisis and take their assets with them. Many wealthy clients decided to split up their investments among more than one adviser.



To make up for the losses, successful brokers have had to go back to something they haven't done since their early years in the profession: Focus more time on client acquisition.



The brokerage industry has long been known for the incentives it lavishes on brokers, including luxurious vacations, fancy dinners or hot-ticket events. Nearly every major brokerage has cut back on these. Some are cancelling vacation awards entirely, or moving them to domestic locations like Florida instead of a more distant, and costly, island stay.



Advisers who once spent their time wining and dining clients at business luncheons and on golf greens are now seeing their entertainment budgets slashed, too.



"We can't even do all the charity events that we used to sponsor, and those were great for prospecting" potential clients, said a Merrill Lynch adviser in the Midwest.



Some advisers paying for this kind of activity out of their own pockets--that is, when they can get out of the office. For the past year and a half, since the markets started melting down, brokers' phones have been ringing off the hook and talking to existing clients has claimed much more of their time.



"It is an ongoing relationship struggle for advisers," Bienfang said. "Most investors are still hesitant to really trust their adviser."



Brokers are also awaiting expected regulatory reforms that are expected to result in a more uniform ethical standard. Most expect brokers, who now are required to pick suitable but not necessarily the best investments for clients, to see their standard raised to the fiduciary level--that is, a requirement that they always act in the client's best interest. Exactly how that is enforced could mean major changes, or not, for brokerages.



"Regulation is the biggest piece of the puzzle, and there is still a lot of uncertainty as to where that is going to land," Bienfang said.



(Annie Gasparro writes about financial advisers and their jobs, with a focus on the challenges brokers face as the industry moves from traditional stock brokerage to high-net-worth wealth management. She can be reached at 212-416-2244 or by email at [email protected])

Jan 12, 2010 2:00 pm

What world does she live in?  How many of you had entertainment budgets?  How many of your phones rang off the hook last year? 

 
Her point of view is that 2010 is bleak?  I guess that depends on what's going on between your ears.  I see 2010 just like I did 2009 - an opportunity.  There are still lazy brokers and dissatisfied clients.  That means ACAT opportunities for the guy who decides to pull his head out of the sand (or a spot that's much darker and more fragrant) and get to work gathering assets. 
 
Jan 12, 2010 2:08 pm
Spaceman Spiff:

What world does she live in?  How many of you had entertainment budgets?  How many of your phones rang off the hook last year? 

 
Her point of view is that 2010 is bleak?  I guess that depends on what's going on between your ears.  I see 2010 just like I did 2009 - an opportunity.  There are still lazy brokers and dissatisfied clients.  That means ACAT opportunities for the guy who decides to pull his head out of the sand (or a spot that's much darker and more fragrant) and get to work gathering assets. 
 
 
Agreed...100%.  People are looking for answers.  I can't believe how many assets are in old employers retirement plans.  Many clients haven't even heard from their advisor.   
Jan 12, 2010 2:29 pm

Relinquish your assets now. It's too hard. This is not a rewarding career. There's more opportunity in China.

Jan 13, 2010 10:48 am
snaggletooth:
Spaceman Spiff:

What world does she live in?  How many of you had entertainment budgets?  How many of your phones rang off the hook last year? 

 
Her point of view is that 2010 is bleak?  I guess that depends on what's going on between your ears.  I see 2010 just like I did 2009 - an opportunity.  There are still lazy brokers and dissatisfied clients.  That means ACAT opportunities for the guy who decides to pull his head out of the sand (or a spot that's much darker and more fragrant) and get to work gathering assets. 
 
 
Agreed...100%.  People are looking for answers.  I can't believe how many assets are in old employers retirement plans.  Many clients haven't even heard from their advisor.   
 
You are not prospecting!!!! I have been doing this for some time and this is the HARDEST period I have ever lived through trying to attain new clents.
Jan 13, 2010 12:47 pm

Yes I am.  People are looking for answers.  They just don't want to hear the same old story as their last guy told them.  It might be a difference between offering them ETFs instead of funds or an annuity with an income benefit vs straight funds.  Or something different like it's OK to be 80% bonds if that's what your risk tolerance is. 

 
I'm not about to say it's easy.  It's not.  But people just simply don't know what to do now.  The person who can figure out what each person wants to hear is going to be incredibly successful at gathering assets.   
 
Jan 13, 2010 1:13 pm
Spaceman Spiff:

Yes I am.  People are looking for answers.  They just don't want to hear the same old story as their last guy told them.  It might be a difference between offering them ETFs instead of funds or an annuity with an income benefit vs straight funds.  Or something different like it's OK to be 80% bonds if that's what your risk tolerance is. 

 
I'm not about to say it's easy.  It's not.  But people just simply don't know what to do now.  The person who can figure out what each person wants to hear is going to be incredibly successful at gathering assets.   
 
 
Amen brother.  BigKahuna...you're so far off base I don't know where to begin.  Case in point:  A couple that is working and living overseas found me online and emailed me.  After a quick exchange of emails, they met with me over the holidays when they were in town.  They are retiring in June and moving back here.  They have $400,000 to invest.  His first words essentially were, "Let's not waste each other's time, let's not bullsh*t each other".  So I say, "Look, I can show you a way that will protect your retirement income while allowing it to potentially grow.  Even if it doesn't grow, you will have guaranteed income that will last you and your wife's life.  My time is just as valuable as yours, so I'm not going to bullsh*t you.  I do think I can legitimately help you". 
 
So we met.  In the meeting, I show him some annuity strategies.  I tell him, "Let's cut out the fluff.  You will pay an extra 1-1.5% in fees for this.  But you don't have to have the same results you've always gotten in the past.  This is different, this will protect your income and lock in the gains for your income".
 
It's simple BigKahuna.  People ARE looking for answers.  They just don't want to hear what they've always heard.
 
Spiff, you're right.
Jan 13, 2010 1:23 pm
snaggletooth:
Spaceman Spiff:

Yes I am.  People are looking for answers.  They just don't want to hear the same old story as their last guy told them.  It might be a difference between offering them ETFs instead of funds or an annuity with an income benefit vs straight funds.  Or something different like it's OK to be 80% bonds if that's what your risk tolerance is. 

 
I'm not about to say it's easy.  It's not.  But people just simply don't know what to do now.  The person who can figure out what each person wants to hear is going to be incredibly successful at gathering assets.   
 
 
Amen brother.  BigKahuna...you're so far off base I don't know where to begin.  Case in point:  A couple that is working and living overseas found me online and emailed me.  After a quick exchange of emails, they met with me over the holidays when they were in town.  They are retiring in June and moving back here.  They have $400,000 to invest.  His first words essentially were, "Let's not waste each other's time, let's not bullsh*t each other".  So I say, "Look, I can show you a way that will protect your retirement income while allowing it to potentially grow.  Even if it doesn't grow, you will have guaranteed income that will last you and your wife's life.  My time is just as valuable as yours, so I'm not going to bullsh*t you.  I do think I can legitimately help you". 
 
So we met.  In the meeting, I show him some annuity strategies.  I tell him, "Let's cut out the fluff.  You will pay an extra 1-1.5% in fees for this.  But you don't have to have the same results you've always gotten in the past.  This is different, this will protect your income and lock in the gains for your income".
 
It's simple BigKahuna.  People ARE looking for answers.  They just don't want to hear what they've always heard.
 
Spiff, you're right.



Interesting, the last three big clients that contacted us found us this way.

Jan 13, 2010 1:26 pm
Moraen:

Interesting, the last three big clients that contacted us found us this way.

 
Word.  I estimate our online marketing probably accounted for between $75k-$100k of gross last year. 
Jan 13, 2010 5:13 pm

All good points. Maybe old school selling is the way to go. Sell'em what they want, not what they need. ( Also, that is not a jab. I don't want it misinterpreted) I think you all make good points. I stand corrected

Jan 13, 2010 5:19 pm
BigKahuna:

All good points. Maybe old school selling is the way to go. Sell'em what they want, not what they need. ( Also, that is not a jab. I don't want it misinterpreted) I think you all make good points. I stand corrected

 
I don't find that statement to be true.  For instance, when I talk to clients about alternative investments, I show them charts that start and end at the same spot.  What happens inbetween the charts is where they differ...which is volatility in this example.
 
Our clients have money, need income to support themselves, then will die and pass along money if there is any left.  They will all take different routes to get there, but they start and end at the same point. 
 
Unless you totally F their situation up, the small details of how you go about doing something doesn't matter as much as getting them to at least DO something.  If it takes giving them a solution that they want, you do it.
Jan 13, 2010 6:08 pm
BigKahuna:
You are not prospecting!!!! I have been doing this for some time and this is the HARDEST period I have ever lived through trying to attain new clents.
 
That's because you're a blow hard piker. It's never been easier.
 
I've been getting referrals left and right from people like your clients.
 
Jan 13, 2010 6:11 pm
BigKahuna:

All good points. Maybe old school selling is the way to go. Sell'em what they want, not what they need.

 
That is exactly what one would expect from you. Go churn what's left in your book piker boy.
 
Jan 13, 2010 6:13 pm

Love fee day. Up nearly 20% from last QT. Good market and good referrals

Jan 13, 2010 8:02 pm
Hydeho:

Love fee day. Up nearly 20% from last QT. Good market and good referrals





aint that the truth

Jan 13, 2010 8:53 pm
Shania Twain:
Hydeho:

Love fee day. Up nearly 20% from last QT. Good market and good referrals





aint that the truth







We are all going to make a ton of money this year. By "We" I mean the Advisors that didn't hide under their desks last year. As tough as it was, the guys that were proactive in reaching out to their clients to calm their fears and keep the assets...congrats!   And for those of us that got after it over the last 12 months, the assets have been flowing in from other firms.



Time to cash in brothers......cha ching!

Jan 14, 2010 10:10 am
Gaddock:
BigKahuna:
You are not prospecting!!!! I have been doing this for some time and this is the HARDEST period I have ever lived through trying to attain new clents.
 
That's because you're a blow hard piker. It's never been easier.
 
I've been getting referrals left and right from people like your clients.
 

 
 
Your future. Don't PM me either LOSER!!!!
Jan 14, 2010 10:21 am
Gaddock:
BigKahuna:

All good points. Maybe old school selling is the way to go. Sell'em what they want, not what they need.

 
That is exactly what one would expect from you. Go churn what's left in your book piker boy.
 
 
I said STOP PM'ing me!!!!!!!!!!!!!!!!!!!Just so everyone here knows......this guy gave me his name, phone number and address and has continually asked me to make love to him the way his high school boyfriend Billy did. Dude, you are sick and no matter what you type on here the answer is NO!
Jan 14, 2010 4:48 pm

Really so lets share it then piker boy he he he. You're so full of sh*t you can't even keep up with you own pathetic reality.

 
Why do you always resort to some sick homosexual blather? What's up with that?
 
So your slapped with the reality of being a piker so the first thing that comes in your head is  homosexual sex acts? Don't you find that strange?
 
Don't you have better things to do just before the open?
Jan 14, 2010 7:42 pm

Um, getting back on topic: Speaking of bleak outlooks for 2010, how'd you like to be a beat writer for a wire news service? Hey Annie, maybe you should go back to night school and get your nursing degree.