New RR Article on Smith Barney

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Sep 27, 2006 6:14 pm

today.


More litigation on the way. I don't know the particulars in this case so I don't wish to take sides (boys versus girls or plaintiffs vs. Smith Barney). What's interesting and this comes up over and over again with wirehouses is branch managers playing favorites with account distribution.


Interesting article if you have not read it already.

Sep 27, 2006 6:27 pm
ymh_ymh_ymh:

today.


More litigation on the way. I don't know the particulars in this
case so I don't wish to take sides (boys versus girls or plaintiffs vs.
Smith Barney). What's interesting and this comes up over and over again
with wirehouses is branch managers playing favorites with account
distribution.


Interesting article if you have not read it already.





It is an allegation that is very difficult to prove, or disprove. 
The girls are just whining and grabbing at anything they can to whiine
about.



It is true that managers will get call in type inquiries from investors
who protray themselves to be Mr. Bucks looking for a new broker. 
That is not always the truth, sometimes it's Mr. Nickels looking for a
broker.



In any case the manager will meet with the prospect and based on that meeting will attempt to make a fit.



Now, put yourself in the manager's place.  You know as well as he
does that people are funny about their money and a lot of people will
not trust a woman as a broker--it's got to do with all sorts of issues
ranging from the suspicion that "girls don't do numbers" to wondering
if she'll quit to go on the mommy track.  These arguments are well
argued and documented.



So here's Mike Manager trying to decide if Mr. and Mrs. Jones would be
more comfortable with Bob Broker or Regina Representative.  Maybe
Mike will even ask the Jones if they would prefer to work with a man or
a woman.  I dare say that 90% of people would say a man--so, is
Mike suppose to force Regina on them?



Out there in the bull pen Regina is having an easier time than Bob
is.  People are less likely to tell a woman to go ****
herself--while they certainly will say that to a man.  Some
prospects will allow a woman to have an appointment simply so they can
see what she looks like--they won't do that with a man.



Should men be suing because they're unable to play the "sex appeal" card?



The whole idea of suing for imaginary slights is offensive.  The
reason that the girls don't achieve in the same numbers as the boys do
is a society problem that has nothing to do with branch managers at
Smith Barney or any other firm.



Now, if you want to talk about the Boom Boom room---well, that's another story.

Sep 27, 2006 6:43 pm

I wouldn't let a woman manage my money and I wouldn't let a man do my laundry.

Sep 27, 2006 10:14 pm
ymh_ymh_ymh:

 What's interesting and this comes up over and over again with wirehouses is branch managers playing favorites with account distribution.


That's why most of us understand just how bogus these complaints usually are. Distributed accounts, to the extent that there are, go to the bigger producers first, hard-charging newbies next. No one could make, or even save a career on distributed accounts.

Sep 27, 2006 11:27 pm

I think the managers should pick 3 advisors that he thinks would be a good fit for the client, say 2 guys and a chic. Then let the client make the decision.

Sep 28, 2006 5:39 am

I don't think the account distribution game has that much to do with gender as it does with who kisses the branch manager's butt the best or who's his/her niece/nephew.


I wasn't specifically referring to newbie "maybe" clients who call in or walk in seeking a broker. The account distribution gravy game I was referring to was the residual accounts which do NOT transfer when a broker changes firms or those left behind when one retires.


Don't you wirehouse or former wirehouse types think it has more to do with who's the branch manager's pet? Or who is under contract and less likely to bail for a while (safe place to park accounts)?

Sep 28, 2006 6:06 am
ymh_ymh_ymh:

I don't think the account distribution game has that much to do with gender as it does with who kisses the branch manager's butt the best or who's his/her niece/nephew.


I wasn't specifically referring to newbie "maybe" clients who call in or walk in seeking a broker. The account distribution gravy game I was referring to was the residual accounts which do NOT transfer when a broker changes firms or those left behind when one retires.


Don't you wirehouse or former wirehouse types think it has more to do with who's the branch manager's pet? Or who is under contract and less likely to bail for a while (safe place to park accounts)?



Not at all.


First, as was pointed out nobody can really rise or fall based on a few hand-me-down accounts.  Whining about them is analagous to whining that you didn't get to wear your big brother's jeans when he outgrew them.  Whining for whining's sake.


The idea that nepotism runs wild in the industry is also not accurate.  As I'm writing I am thinking of incidents that I am aware of, and while I can think of several examples they are all at the production level--mostly father/son arrangments.


Finally, the kissing butt argument.  No doubt favortism exists in every industry, and no doubt being pleasant and cooperative is a quicker way to garner favor than being disagreeable.  It is my experience--which, admittedly, is only thirty five years--that managers tend to favor people who don't have a chip on their shoulder.


It is also my experience that the vast majority of female brokers do have a chip on their shoulder.  They are driven, the current version of the women's lib types of the '60s--not as shrill, but just as angry.


Women do not make it in this business in significant numbers because society tends to minimize women's capabilities in the areas that are considered critical to success--namely numbers and analytical thinking.


They're trying to do a sales job that has the image of a numbers job.  Ideally they could tell a prospect, "Mr. Johnson, I am not going to be analyzing balance sheets and income statements for you.  Others will do that.  My job is to convince you to trust our firm with your money.  I'm a saleswoman not an analyst."


Women in Wall Street are finding great success in areas where they do not have to depend on how the public perceives them--put the cause for their failure on the front lines where it belongs.  In the minds of their prospective clients, not with the managers of their firm or an "unfriendly" attitude in the branches where they work.

Sep 28, 2006 6:56 am

I agree with most of that, that's it's a "societal" image issue rather than a sexism problem within the brokerage industry (particularly retail brokerage).


Women have had NO issues in other areas. Look at Zoe Cruz at Morgan Stanley (bond trading) or Wendy DeMonchiex at Bear (derivatives trading). Sally Krawchuk (CitiGroup) has done well in several areas to include research.


I do, however, think that the wirehouses have issues at the branch level. What happens in many of these gender/race based class action suits is there are a few branches which have legitimate problems (branch manager who is sexist/racist) and they (wirehouse senior management) permit these issues to morph into firm wide lawsuits (attorneys are very opportunistic).


I have in the past managed many women and men at various levels including management. I tended to prefer married males with kids the best as they had NO choice but to show up for work every day which meant I could depend on them. Single mothers with kids were the least dependable in my experience. With the under 30 crowd, I preferred single women with no kids to single men. Less "I am sick" Monday morning problems (too much weekend party time). With the over 50 types, I didn't have any preferences. Had a lot of over 50 women who performed better and were more reliable than their over 50 year old male peers.


What do you personally plan to do as far as assuring your client base gets an advisor who will give them comparable service/performance after you retire? Do YOU or they have any say so in who gets their accounts to manage?


Sep 28, 2006 7:08 am

Typo, Sallie Krawcheck. Her brothers (3 of them) are all attorneys as is her dad (am not flaming lawyers over here).

Sep 28, 2006 7:18 am

A racist or sexist would be somebody who believes that one race or gender is superior over another race or gender and as a result of that superiority concludes that the superior race or gender has a right to dominate the inferior race or gender.


There are very few people who actually believe that.  On the other hand virtually everybody on earth is prejudiced.  If you've ever thought, "I think he would be better at _____ than him" you are prejudiced.  The entire hiring process is an exercise in prejudice.


The fact is that there are significant differences between the races and the sexes and one of society's biggest blunders is pretending there are not.


The idea is to grant opportunity to people who you think might make it and that is being done up and down the personnel ranks.  If the manager of the Elmira office hires a woman instead of a man that manager is taking a calculated risk--bucking the trend.  It does not mean that they are enlightened any more than it would mean that they were a sexist if they chose a man instead of a woman.


What a manager cannot do is force prospects to become clients, and if Mr. or Mrs. Prospect decide they are only going to trust a middle age white male with an MBA and CFP with their life savings that is their decision.


All the whining and class action law suits on earth cannot change human beings and the prejudices they carry with them.

Sep 28, 2006 7:28 am

But how many managers in wirehouse land do give Mr. and/or Ms. Prospect/Client the "choice?"


Do they look at his/her stated needs/desires then match them with the advisor who's the most capable of meeting/exceeding them? I don't think that's done in a lot of cases.


On the prejudices, everyone has them and anyone who says they don't is a liar.


Are you and others aware that at least 3 of the major wirehouses (MER, MS, and SB/C) now have bonuses for managers who can recruit or retain more women/minorities?

Sep 28, 2006 8:12 am
ymh_ymh_ymh:

But how many managers in wirehouse land do give Mr. and/or Ms. Prospect/Client the "choice?"


Do they look at his/her stated needs/desires then match them with the advisor who's the most capable of meeting/exceeding them? I don't think that's done in a lot of cases.


On the prejudices, everyone has them and anyone who says they don't is a liar.


Are you and others aware that at least 3 of the major wirehouses (MER, MS, and SB/C) now have bonuses for managers who can recruit or retain more women/minorities?



Recruiting women and minorities is a piece of cake--it's getting them to make it that is all but impossible.


Again, it has to do with prejudices among the public and the reality is that millions of men dont' trust women to manage their own money very well, much less somebody else's.


Sadly that prejudice extends to women too.  I just asked my wife why she thinks women brokers have such a difficult time and she said, "Because women are not good with that kind of stuff."  This is a college educated woman's point of view about her own gender--and I dare say she is not at all unusual.


The attitudes are even more ingrained when you venture into the provocative area of raising this issue regarding the racial minorities.


I think a very revealing fact is that it was only after the decision to "play the race card" was made that OJ Simpson hired Johnny Cochran.  I'd be willing to wager a lot of money that a white male manages his money.


Prejudices and stereotypes are maddening, but they are not invented out of whole cloth and are a very real reality that needs to be faced.

Sep 28, 2006 8:26 am

I know it's a problem and many college educated women feel the same way as your wife when it comes to choosing someone to manage their money.


One of the biggest challenges (in my opinion) facing this country and the brokerage business is demographic changes and how to serve clients who are not necesarily Caucasian males.


Not sure if you're aware of a not so funny story about a few retired NFL players (all black I think) suing their former African-American hedge fund manager (Kirk S. Wright). The money's gone----up in smoke. Kirk liked to buy fancy cars, 2nd wives who liked to shop a lot, and take expensive vacations. Kirk's in jail now for fraud. The FBI found him and wife number 2 poolside in Miami Beach at some 5 star hotel. I think Kirk had an Ivy League MBA, too (can't remember which school other than it wasn't Penn).


A bunch of white pension fund managers are suing Amaranth for permitting a 32 year old Caucasian Canadian (Brian Hunter) to use too much margin and overconcentrate on natural gas futures.


Who wins? The lawyers (mostly white guys over 50).


Sep 28, 2006 8:33 am
ymh_ymh_ymh:

I know it's a problem and many college educated women feel the same way as your wife when it comes to choosing someone to manage their money.


One of the biggest challenges (in my opinion) facing this country and the brokerage business is demographic changes and how to serve clients who are not necesarily Caucasian males.


Not sure if you're aware of a not so funny story about a few retired NFL players (all black I think) suing their former African-American hedge fund manager (Kirk S. Wright). The money's gone----up in smoke. Kirk liked to buy fancy cars, 2nd wives who liked to shop a lot, and take expensive vacations. Kirk's in jail now for fraud. The FBI found him and wife number 2 poolside in Miami Beach at some 5 star hotel. I think Kirk had an Ivy League MBA, too (can't remember which school other than it wasn't Penn).


A bunch of white pension fund managers are suing Amaranth for permitting a 32 year old Caucasian Canadian (Brian Hunter) to use too much margin and overconcentrate on natural gas futures.


Who wins? The lawyers (mostly white guys over 50).



Wall Street is littered--absolutely littered--by dishonest brokers who worked with professional athletes.


I find it curious that pension funds are using margin and trading futures at all.  I suspect it's an effort to solve the under funded pensions problem that is blowing up all around us.


Nonetheless whining about a portfolio manager using too much margin is something that should be laughed out of the process.

Sep 28, 2006 8:53 am

The state/municipal pension funds were invested in Amaranth which is/was a hedge fund. The problem with Amaranth (registered with the SEC) is risk controls were absent. They let a 32 year old kid bet over 50% of their dough on NG futures. You can leverage those bets by a factor of 20 in some cases (ouch)!


Arlen Specter's going nuts over this. PA was one of the state pension funds who got a little toasted. The biggest losses (percentage wise) were incurred by the San Diego County Pension Plan.


Those former NFL players are also suing the players' union. I guess someone there (a union official) was a college buddy of Kirk Wright's and gave him a STRONG BUY!


It's been my experience that professional athletes (white or black or in between) aren't the world's sharpest when it comes to due dilly on financial matters. I guess the term "dumb jock or jockette" is a valid stereotype!

Sep 28, 2006 9:01 am

With regard to retail brokerage and women, when I was at the wirehouse the branch manager bent over backwards to cater to the women. They were distributed some pretty good accounts just because a successful woman in the branch made the branch manager look good to the corporate clowns in NY.  Women are also a protected class in this industry, and therefore given more favoritism in many cases. However, as most of us realize inherited clients generally turn out to be much less valuable to a broker than clients you get on your own.

Sep 28, 2006 9:04 am
ymh_ymh_ymh:

They let a 32 year old kid bet over 50% of
their dough on NG futures. You can leverage those bets by a factor of
20 in some cases (ouch)!





The real crime in this is that the 32 year old was fired without a severance package.

Sep 28, 2006 9:35 am

I would have given him a 21 gun salute firing squad and had his risk control officer, CCO, and head honcho hold his hand while he was up against the wall.


On the "inherited" clients most wind up not too happy and leave for greener pastures eventually. The best clients usually do turn out to be the ones you get on your own.



Sep 28, 2006 9:42 am
Soon 2 B Gone:
ymh_ymh_ymh:

They let a 32 year old kid bet over 50% of
their dough on NG futures. You can leverage those bets by a factor of
20 in some cases (ouch)!





The real crime in this is that the 32 year old was fired without a severance package.



spoken like a true middle manager.....fresh from a lifetime of living off the fruits of others' labor....

Sep 28, 2006 9:44 am

Psychologists will tell you that a characteristic of the mentally
retarded is the inability to realize when others are speaking with
their tongues in their cheeks.