Wirehouse Client Questions

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Apr 18, 2008 8:00 am


I'd like to throw a question out there to my wirehouse brethren.  I'm fairly ignorant about the wirehouse world as I've been an independent for 20 years.  I am curious, over the past 6 months as we've seen massive writedowns at and huge hits to the stock prices of many of the major wirehouses, are you seeing any pushback/confusion/questions from your clients?  Is it an impediment to your business in any way, either in retaining clients or attracting new clients?

Thanks for your comments.

Apr 18, 2008 10:12 pm

I am at SB, and I have had some questions, but not a lot. For the most part clients are satisfied with my telling them about the strenght and depth of Citi, and also about the laws that require their holdings to be segregated from the firms funds and not subject to creditors (unless they are margined, but I dont do much margined trading.

 
I'd stress, to answer your question, that the queries from clients for me at least, have been few and far between.
Apr 19, 2008 2:21 pm

Two anecdotal points.
One, I am very involved on boards and other community endeavors where I do not solicit biz, but the others know what I do and chat finances with me. The CEO of a well-known company recently told me that he gets calls from ML all the time and he just wants to tell them "You guys can't even manage your money, you think I'm going to give you mine!" I've heard something similar about C from another deep-pocket.

My wife advises UHNW advisors. In the course of her business she spends a lot of time interviewing many high net worth people, some of them household names. For confidentiality reasons we never talk business, but she did tell me that I need to go hard after anyone I know who has any $$$ at ML....everyone she speaks to wants to get as far away from them as possible.

Apr 19, 2008 9:41 pm

I work at a wirehouse and have had lots of conversations regarding the writedowns, but have not lost a prospect due to it.  I am upfront and honest in what happened and pull no punches criticizing the people formerly with our firm.  Also, our firm continues to bring in a record amount of new assets.  It may be slowing us down some, but has not slowed me down on a personal level.

Apr 21, 2008 8:38 pm

I call Bull$&*#.

Apr 21, 2008 8:39 pm

On Avises comment: I call Bull$#@*.

Apr 21, 2008 11:57 pm

Had a client call the other day and ask if the lights were still on, got a good laugh out of it... and another $100m from the client.  Make every call a sales call.

Apr 22, 2008 12:16 am

Maybe he is just a slow starter... or a quick finisher...

Apr 22, 2008 12:25 pm
highroad:

On Avises comment: I call Bull$#@*.



What do you call Bull$#@* on?

That two people mentioned to me that they have lost faith in ML and C?

That my wife mentioned to me that in her business conversations with her clients clients she has been picking up a lot of negativity towards ML?

That she would suggest that ML clients may be easier to go after right now?

I mean none of those things are rocket science, they are pretty much common sense. 

A lot of people are wary of ML and C. I don't watch Leno or Letterman but I would be surprised if they haven't made fun of their financial prowess. And in any competition you go after your opponents weakness. For the next couple of years ML's weakness will be credibility.

Apr 22, 2008 12:40 pm

And speaking of going after your opponents weakness. Here is Schwab lambasting brokerage analysts.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aafbjqdWG7pQ

It's a good strategy.

People shop ML because 1) ML has the best sales force in the business 2) They buy into the old EF Hutton tagline "When [insert big firm name here], people listen."

When ML, SB, UBS lose point number 2, it makes it much harder for any sales force to pitch the company's wares. When you have two major F'ups on point 2 in less than 10 years, it will take a long time before the perceived value of [insert big firm name here] investing acumen will be a great selling tool. 

Apr 22, 2008 12:55 pm
avise:

And speaking of going after your opponents weakness. Here is Schwab lambasting brokerage analysts.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aafbjqdWG7pQ

It's a good strategy.

People shop ML because 1) ML has the best sales force in the business 2) They buy into the old EF Hutton tagline "When [insert big firm name here], people listen."

When ML, SB, UBS lose point number 2, it makes it much harder for any sales force to pitch the company's wares. When you have two major F'ups on point 2 in less than 10 years, it will take a long time before the perceived value of [insert big firm name here] investing acumen will be a great selling tool. 

 
It's completely fine with me.  Lately, people have been loving the fact I don't sell any proprietary products and can provide completely objective advice from that standpoint. 
 
I was at an event sponsored by a fund company that drew a number of wirehouse reps.  I specifically went up to the UBS guys and asked them about the ARS market and if they were affected and what they thought.  They weren't dancing jigs and singing koom-ba-ya, that's for sure.
 
You could see the pain in their eyes and face, although they wouldn't say much. 
Apr 22, 2008 2:57 pm

Snag

You may not sell any of there proprietary products, But you are still a  DRONE!
No better then a UBS DRONE!
Apr 22, 2008 3:01 pm
Greenbacks:

Snag

You may not sell any of there proprietary products, But you are still a  DRONE!
No better then a UBS DRONE!
 
I am what I say I am.
 
I'm not saying I'm better than anyone.  Just at this current time, some people's fears over recent wirehouse news has created a pain for which I can relieve being independent.
 
Sorry if you don't understand this, when English is a third language, it can be a bitch.
Apr 22, 2008 10:44 pm

I don't doubt that there are people nervous who are clients of SB or ML or MS. What I do think is that when the advisor is good to their clients, when the client asks about what is going on, they explain it and move on. I think that there are people who talk at events about things they don't really know about or care about to continue conversation. That's who's talking about ML or SB or MS in many cases.... People who don't have accounts there who are just talking to make conversation. I think that the bigger targets and best companies are talked about a lot more in the general public (except here where everyone except a few talk about EDJ the cult because it's universal that most dislike the company).