What this news means is that banks are still finding it difficult to deal with the completely different cultures.  Look for PNC to unload Hilliard Lyons and Regions to unload Morgan Keegan.

Banks are not comfortable with the idea of having their customers associate losing money with the bank--and regardless of how many disclaimers and disclosures are given it's just not in their blood.

Nor is it in the client's blood.  If I were a bank based financial advisor I'd be scared schitless about how the clients will react when the market suffers a signficant downturn--the marshalls who serve the paperwork when arbitration is being demanded will get to be on a first name basis with those who are being served.

That nice Mrs Jones will say the risks were not explained, that she believed she was dealing with the bank and that her money was secure.

She'll be shown her signature on a customer agreement where she acknowledges that she understands the risks and she'll say that on the day she opened her account all the young man did was put forms in front of her and she signed them--just like at a house closing.  That the young man did not explain anything.

And you know what?  She will be believable.

Just too much risk for the banks.  Could Key Bank's timing indicate that they, Key Bank, thinks that Wall Street is in for a real bruising?

I do, and you should too.

[quote=Paulcl]

McDonald just got bought out by UBS.  Before we all get the song and dance from the UBS guys, I'll like to hear opinions from this group.

Payouts?? Support?? Technology?? Any former Piper folks on the board??  I'm not sure about working for a wirehouse?? How about payouts on client relationships under $100,000???  Do we get paid on transactions? C shares? fee accounts????

Thanks

Paul

[/quote]

UBS is for all intensive purposes a rebranding of Paine Webber.

1. Payouts are equivalent to any of the major wirehouses.

2. Very few Piper brokers (my knowledge is limited on this one) stayed. Many went to RBC Dain.

3. You get paid on accounts less than $100k (unless there has been a very recent change)

4. Transactions - yes, C-shares yes (but, they are limiting their use), fee accounts - yes

My guess is that you will find the technology and platform to be much stronger. Most of your big producers should leave. You will be offered (probably) a retention check based on a percentage of your trailing 12.

Offices are nicely decorated (generally) and the firm has the most intense compliance currently.

Managers are among the worst paid. All but the biggest managers are producing.

Technology is pretty darn good.  Product access, including hedge funds, is very good.

To call compliance ‘intense’ is putting it nicely.  They are bureaucratic and impractical.

As a firm they are interested primarily in service the LARGEST clients and LARGEST brokers.

[quote=NASD Newbie]

What this news means is that banks are still finding it difficult to deal with the completely different cultures.  Look for PNC to unload Hilliard Lyons and Regions to unload Morgan Keegan.

Banks are not comfortable with the idea of having their customers associate losing money with the bank--and regardless of how many disclaimers and disclosures are given it's just not in their blood.

Nor is it in the client's blood.  If I were a bank based financial advisor I'd be scared schitless about how the clients will react when the market suffers a signficant downturn--the marshalls who serve the paperwork when arbitration is being demanded will get to be on a first name basis with those who are being served.

That nice Mrs Jones will say the risks were not explained, that she believed she was dealing with the bank and that her money was secure.

She'll be shown her signature on a customer agreement where she acknowledges that she understands the risks and she'll say that on the day she opened her account all the young man did was put forms in front of her and she signed them--just like at a house closing.  That the young man did not explain anything.

And you know what?  She will be believable.

Just too much risk for the banks.  Could Key Bank's timing indicate that they, Key Bank, thinks that Wall Street is in for a real bruising?

I do, and you should too.

[/quote]

This is all true. 

Mrs. Jones will not remember if you explained the risks and in fact will deny that you explained the risks to her. The Bank personnel and management will want to distance themselves from you and as NASD said they are already seeing the handwriting on the wall. Having been in the business for sometime, I have experienced this effect myself.

I believe that we will really begin earning our money again in the next few years.  This is why I have expanded my business into being more than just a product placement/sales type of practice.  As as been stated before if all we do is offer mutual funds and stocks, who needs us?  Anyone with half a brain can do that and we don't want the clients with less than half a brain in any case. 

Becoming a trusted advisor in other financial areas of the clients life, not just  just the portfolio of investments, will help us to weather the upcoming storm.

[quote=joedabrkr]Technology is pretty darn good.  Product access, including hedge funds, is very good.

To call compliance 'intense' is putting it nicely.  They are bureaucratic and impractical.

As a firm they are interested primarily in service the LARGEST clients and LARGEST brokers.
[/quote]

Thanks for the responses.  One error...according to RR webpage, nearly 85% of Piper advisors signed with UBS.

I worked at Dean Witter/Morgan Stanly for over ten years and wanted to get away from a wirehouse.  Lucky me...a wirehouse bought me. 

Why would UBS want to get into the hamburger business?

Regarding banks/risk, I have to disagree with you on this one.  Am I the only one who was around when the S&P 500 dropped 50% and the Nasdaq 80%? Was there an avalanche of complaints that broke up the bank/brokerage arena?  Obviously the answer is no.  While clients may deny having any knowledge that these investments had any risk associated with them, that will happen at a both banks and wirehouses.  Putting clients in plain vanilla type mutual funds and established money managers isn't going to create any more of a liability for you at a bank, rather than at a wirehouse.  That said, I do think those exotic structured/packaged products, as well as these EIA's will have reprocussions should things not go well.  And don't even get me started on all the other annuities that are sold as "CD alternatives."

Furthermore, regarding babbling looney's comments- clients do need savvy, experienced advisors to help clients' with their money.  Our job is to manage risk and attempt to outperform "the market" over time.  Anyone can buy stocks and funds but how many individuals have the time, inclination or savvy to do an outstanding job on their own? Some, but not many.  I have come across countless account statements from various discount shops, and the vast majority of the clients lost their a$$ via stock trading, or severely underperformed effectively managed funds.  But hey, it only cost them twenty five basis points a year to miss 50% in gains.

And getting back to a comment made by NASD a while back, some clients will still trade stocks.  I do this with all (willing) clients I consider "substantial." I've been able to enhance their performance, give them special attention, and (I believe) make myself more valuable on an ongoing basis.  Not to mention the additional gross production. The last thing I want is a book of business consisting of stock traders.  Still, providing timely recommendations goes a long way and certainly sets you apart from the advisor that offers nothing but packaged products.  Also, it takes a considerable amount of research which keeps you sharp and informed with regard to what's going on in the financial markets.  Savvy, HNW people want strong, educated opinions.  I have that and share it often.  Often times, I'll peruse a prospect's statement and be able to offer a valid opinion on many of his holdings, and be able to back up what I'm saying.  While I may not always be correct, and they may not always agree with me, I can tell you that it provides a degree of instant credibility.

[quote=The Judge]

Am I the only one who was around when the S&P 500 dropped 50% and the Nasdaq 80%? Was there an avalanche of complaints that broke up the bank/brokerage arena?  Obviously the answer is no.  [/quote]

As I've opined previously--the tech implosion happened concurently with the shock of September 11th and it was considered patriotic to hold on to your investments--to not let them win by driving our stock market lower.

So, no there were not a lot of complaints--but the environment was different, the sentiment was different, the hands holding the portfolios were stronger because it was a sacrifice in a time of war.

The next time the hands holding the portfolios will be older, the pensions that are being depended on will be much shakier, and (hopefully) the decline will not be triggered by an act of war.

You're naive if you think that clients will not seek legal help to get their losses back.  "The Law Offices of James Sokolove" runs ads every day inviting people who lost money in the stock market, mutual funds or even annuities to contact them.

Your own brother will do it figuring that you have insurance and if he doesn't his retirement is screwed.

The danger is horrendous--absolutely horrendous.

[quote=joedabrkr]

To call compliance 'intense' is putting it nicely.  They are bureaucratic and impractical.

[/quote]

Can you give some examples of "intense" compliance at UBS versus other wires?

Newbs....

Good post.. I agree with your assessment of the nature of things after 9/11..

Now go play with those pigeons in Washington Square Park....

[quote=blarmston]

Newbs....

Good post.. I agree with your assessment of the nature of things after 9/11..

[/quote]

Just what I crave, acceptance of a point of view regarding September 11th from somebody who was in college when it happened.

Actually... I was already in the working world for several years... Sorry fruitcake- yet another innacurate post...

Once again, it saddens me that my hometown is infested with the likes of somebody of your caliber...

Sorry people- you have this one wrong.

Before 9-11-01 the S&P 500 had already dropped over 25% from it's peak and the NAZ about 70%.  There was "talk" that hedge funds would refrain from shorting, among other things.  No dice.  This is Wall Street where the idea is to make money.  Period.  There was no patriotic display of holding on to stocks.  In fact, the S&P dropped almost 25% in 2002 and the Naz over 30%.  I actually had clients call in asking about shorting opportunities, a first for me.  While that may be my experience, the indexes show what carnage continued to take place.  When there is blood in the water the sharks attack.

Who knows what the future brings.  I read all sorts of research, proprietary- generally bullish as well well as outside sources with primarily a bearish bent.  The doom & gloomers have been at it for years.  And they'll continue that stance, regardless of the 50% move up in the past 41 months.  I'm a huge proponent of Jeremy Grantham, who runs GMO.  While he has been vocally bearish for years, he makes money for my clients every year.  And so what if we have a pullback/correction.  Over the past three years we've had approx. 4 corrections of 10% or more.  In hindsight, they've been buying opportunities.  And then some.  With the S&P at 15x earnings and all the news, stocks will move higher over the next couple of years.  Not a huge advance, but enough to make your clients grateful. 

What do you suppose will happen if some big bellweather issues miss their earnings?

Or am I wrong, perhaps earnings always go up as the bank kid said?

Judge said:

"Sorry people- you have this one wrong.

Before 9-11-01 the S&P 500 had already dropped over 25% from it's peak and the NAZ about 70%.  There was "talk" that hedge funds would refrain from shorting, among other things.  No dice.  This is Wall Street where the idea is to make money.  Period.  There was no patriotic display of holding on to stocks.  In fact, the S&P dropped almost 25% in 2002 and the Naz over 30%.  I actually had clients call in asking about shorting opportunities, a first for me.  While that may be my experience, the indexes show what carnage continued to take place.  When there is blood in the water the sharks attack"

Exactly Judge.  Its history but not ancient history.  Equating holding onto stocks with patriotism is absurd and defies finance theory. 

So what if some firms miss earnings?  Its more important to understand WHY they missed earnings? 

NASD- No doubt a big bellweather will miss earnings.  Probably a number of them will.  3M did it a little while back.  With the VIX/VXO at around 12, another pullback and some genuine fear in the market would serve it well.  Corporate profits/growth can’t and won’t continue to this degree. A reversion to the mean will occur. 

[quote=The Judge]NASD- No doubt a big bellweather will miss earnings.  Probably a number of them will.  3M did it a little while back.  With the VIX/VXO at around 12, another pullback and some genuine fear in the market would serve it well.  Corporate profits/growth can't and won't continue to this degree. A reversion to the mean will occur.  [/quote]

In the sterile world of a message board discussions such as this are virtually meaningless.

What advisors have to be able to deal with is client emotions--and cavalier attitudes such as "Hold on, earnings always go up so the stock market will too" are going to piss off your clients.  It's their money, and they will be scared to death--their very lives hang in the balance.

Much is made of the tech implosion of a few years ago--the reality is that most people expected it and were not surprised when it happened.  Sure they lost some portfolio value because most equity fund managers were in things like Cisco, at least a little bit.

Look at the charts of that time--the so called implosion mostly occured in 2000, bottoming out in the spring of 2001.  Clients who were pissed and confused were going to hold for awhile to see if they came back--they didn't, but what happened was September 11th which suddenly changed the landscape.  In light of what was happening complaints about advice regarding the stock market seemed to be little more than empty whining--so the investors sucked it up and didn't complain in anywhere near the numbers that would normally be expected.

Then there was the second shock--post 9/11.  Well, complaining about that was not going to resonate with anybody so even the attorneys were reluctant to accept those cases.

As a result of the timing of Septemeber 11th events--right in the middle of a two legged crash--Wall Street was able to avoid what would have surely been disasterous arbitrations.

What is likely to happen--at least the view of a great many--is a 1970s style slow slide down.  It is possible for the market to lose value every day for weeks and weeks.  Down 45, Down 12, Down 87, Down 19, Down 2.....getting better?......Down 3......it is, it's getting better!.....down 10......I'm telling ya, the worst is over......Down 9.....I'm gonna buy right now!......Down 320.......Just damn!

Your client's portfolio loses 50% of its value---you're sitting there like Alfred E Neuman saying, "Hold on, earnings always go up."  The guy leaves your area and goes to see an attorney.

Two or three weeks later you are served with a demand for arbitration.  The way the client sees it is this.  If he loses his case he will be no worse off than he is today, and if he wins he'll get 2/3rds of whatever the panel awards him.  His attorney is going to take the case "for free" so it's a no risk situation for the client.

The claim will be unsuitable recommendations-- but interwoven  into the claim will be claims that you did not keep them informed.  You did not discuss the risks they were taking, all you ever did was talk about how much money they were making and you never talked about what to do if the market went down.

You will be sworn in, hand on the bible stuff--promise to tell the truth, the whole truth and nothing but the truth.  You will explain that you spent a lot of time talking to your client--a farmer.  You'll be asked to explain the risks to the panel in as close a duplication to what you told the farmer as you possibly can.

You'll be nervous as a cat and will stumble all over your own tongue.  You will babble something about PE ratios, historic trends, 200 day moving average, spikes in the market and then add some drivel about over the long run the market outperforms inflation.

The client's attorney will ask if you believe that it is possible for a client to lose 50% of their account's value.  If you say yes you're laying a trap for yourself because you will be asked if you told the client that they could lose 50% of their account's value.  If you say no you will be portrayed as a fool and/or a liar.

Then the client will be asked if he was ever told that he could lose 50% of his account's value.  Of course he wasn't--who in their right mind would buy something that had been described as possibly losing half its value, especially conservative folks such as farmers.

Failure to explain risks to your client is a form of fraud.  Your E&O carrier does not pay if you're involved with fraud--plus your E&O carrier is on the hook for hundreds of millions of dollars in claims, they're grasping at reasons to decline coverage.

I know, I know--you sell principal guaranteed investments.  You're going to be able to give them their money back.  As long as the insurance company doesn't default on them--just damn, I wonder if that could happen?  Wow, could the insurance companies fail to honor their contracts?  Has an insurance company ever failed?  Doesn't my firm do due dilligence on these things?

Even if the client does get their money back an attorney will be more than happy to file an arbitration claim because the client could have done better in a passbook savings account.  It's folly to think you're safe just because you're able to give them their money back--in fact, I think you're more liable because you are being paid to grow their accounts not keep them the same.

Imagine sitting there and the client's attorney--you can't imagine how sleazy they are--starts asking you what you see to be your role in the tableau.  If you say that it is to grow your client's assets he will take you down a path that causes you to admit that guaranteed products do not really offer much growth.  If you say anything else he'll paint you as not knowing what you're supposed to do.

Then the client will say that the only time they talked to you was once a year when you told them that you'd be mailing them a summary of how their account performed, and how you told them to not worry about the market because they were in a guaranteed investment.

Your attorney will ask them if they truly believed that there would be a reward if there was no risk and they will say that that is exactly what you told them--that you had a magic investment that had repealed the risk reward ratio.  The proverbial free lunch.

All of a sudden you're back at that place where your E&O carrier denies coverage because you committed fraud in your statements--it's not what you said, it's what you didn't say.  You didn't tell the client that the guarantee came with a price.  Just damn, screwed again.

You boys and girls are treading on the thinnest ice in the history of Wall Street.  Many of your clients do not have defined benefit pension plans, and those who do are seeing them being dumped on PBGC in record numbers--Google Delta Pilot's Pension Plan if you don't know what I'm talking about.

There are doctors, lawyers and Indidan Chiefs out here managing their own futures--all with your "help."  Some of you are close to being functionally illiterate--you can't write a coherent thought without misspelling, poor punctuation and so forth.  You are a lawyer's wet dream.

So, how do you try to control the risk.  Read what Babbling Looney had to say yesterday.  You attempt to form true relationships with these people--you try to humanize yourself so that when they lose (not if they lose, when they lose) they will see you as a human being who is not infallible, and who always acted with their best interests at heart.

But the cold reality is that mothers sue sons, fathers sue daughters, brothers sue their brother all the time so there really isn't a safe harbor.

Have a good weekend.

Most of what you said is true, and scary. We operate with certain risks. However, the risks are no different than what other businesses are exposed to, i.e product liability, employee liability, and any other reason the general public might dream up and collaborate with a sleazy attorney in order to make a buck of a company no matter what the size of the outfit. Welcome to America!

Off subject....as I appreciate all of your opinions on the markets, the post 9/11 environment, etc....this line of conversation has nothing to do with my original questions on UBS.   No offense, but please move your conversation to another thread. 

Thanks

Paul