As months and years pass, everything changes--including this business. Old-school brokers, the stock pickers who dominated Wall Street for much of this century, are being challenged by a new generation of techno-savvy upstarts who defer to professional money managers.
But that doesn't mean older brokers--the 55-ish crowd in the biz for 15 or more years--are being trampled on by wired reps with jazzy cell phones and laptops. Not a chance. In fact, some younger reps note an advantage older brokers have.
"These days, it helps to have a few gray hairs," says 24-year-old David Bernstein of A.G. Edwards in Huntington, N.Y. "Many people want someone with experience, someone who's been through it all."
At the same time, senior reps admire rookie brokers' competence with computers. "The technological changes in this industry in recent years are absolutely mind-boggling," says 22-year veteran Dave Almquist of A.G. Edwards in Dana Point, Calif. "Technology moves faster than most people are able to digest it."
Differences, however, don't diminish the sense of mutual respect between the groups.
"I get the feeling that we're looked at as survivors," Almquist says. "The younger brokers look at us like, 'Man, this is a tough industry. You have staying power.'"
"I don't find that older brokers are threatened by our youth and energy," says a 7-year broker at PaineWebber in Denver. "Their experience, confidence and knowledge offsets some of the positive traits we bring to the table."
Here's a look at the differing philosophies and experiences of two generations of brokers.
BUSINESS MIX New: "I work mostly with money managers because that's the way our business has shifted. I'll pick stocks for a client for 20 percent of the money, but the rest of it I'll use some kind of managed money because I have to leverage my time. You can't be a jack of all trades in this market. The money managers have to hold up to certain benchmarks. If they don't, they lose assets."--7-year broker Deep Paul, PaineWebber, Bakersfield, Calif.
Old: "I do good ol' meat-and-potatoes stocks and bonds. I still believe it's better than money managers because the investment is not involved in so much turnover and short-term performance. Over the long haul, I believe that's the best system, and I believe it always will be. It's evident that younger brokers go toward managed money, products they don't have to take responsibility for. It's easy to tell someone, 'I'm going to put your money with a money manager.'"--22-year veteran Dave Almquist, A.G. Edwards, Dana Point, Calif.
BUILDING BUSINESS New: "Since I've been in the business for only six years, I initially started cold calling, but I wasn't all that happy doing that. I wanted to meet people face to face. That's my strength--talking to people eye to eye. That way they get a sense of what I'm all about and learn to trust me. So whenever I'm out, I make it a point to talk to as many people as possible--at a supermarket, a gas station, at parties. If it's appropriate, I talk business. I've gotten a lot of new clients that way."--6-year broker, Edward Jones & Co.
Old: "All of my new business comes from unsolicited referrals. I don't have to ask clients for referrals. You have to earn them, and you earn them by performing."--16-year veteran Bob Kargenian, Prudential Securities, Newport Beach, Calif.
STYLE New: "I work very closely with CPAs and trust attorneys. For example, I'll meet with a client and their trust attorney to discuss their particular situation. Then we'll decide how to handle the investments. So I'm basically taking from the estate planning side to the investment side. Old-school brokers usually did the investment first. Then the client would say, 'Hey, I need a trust.' The broker would network and get a trust attorney. The older brokers aren't involved in the entire process like we are today."--7-year broker Deep Paul, PaineWebber, Bakersfield, Calif.
Old: "I'm like a lot of [older] brokers in that I don't get into estate planning. I stick with selling stocks and bonds. It's what I feel comfortable with."--42-year veteran, Morgan Stanley Dean Witter.
SERVICE New: "These days, you need to do everything for your client when it relates to any financial transaction. For example, I had a client talk to me about a problem they had with a property in Europe. They didn't have insurance for a particular problem, so I made the call to find out what they could do. That's what a broker has to do these days: be everything financial to their client."--3-year broker Joe Koralik, A.G. Edwards, Dana Point, Calif.
Old: "Relationships must be cemented because in this day and age if a client is made to feel they can function without you and your advice and expertise, you've written yourself off."--16-year veteran Robert Greene, Prudential Securities, Great Neck, N.Y.
TECHNOLOGY New: "This is the one area where we have a big edge over older brokers. We just seem to have a more thorough, overall knowledge of all the technology and how to use it to our advantage. When it comes to the Internet, younger brokers have been brought up with computers, and I believe we have a better feel for their many uses. We can find certain bits of performance information that I'm not so sure they're aware of."--7-year broker Deep Paul, PaineWebber, Bakersfield, Calif.
Old: "Newer brokers are very technologically oriented. We use our heads more. They use technology. Both can have its advantages. It's certainly good to have as much knowledge as possible about technology and the Internet, but I really believe we've gone overboard with the Internet. I think there's too much information out there, not all of it substantial and useful. I think younger brokers rely too much on information obtained over the Internet and sometimes that can hurt them."--31-year veteran, Everen Securities.
TRAINING New: "I think younger reps are definitely trained differently from the way older brokers were, but I don't think it's necessarily bad. It's just different. From what I understand, there's a greater emphasis on selling, which is good because in today's environment you need to sell. There's also an emphasis on technology. What our training may lack is a history of the industry."--5-year broker, PaineWebber.
Old: "What bothers me more than anything is that firms are no longer training young brokers to be advisers. They're training them to be salespeople. Sales have become an overriding priority versus what may be best for the client. When you have people pushing transactions or putting clients into managed products, it's an easy way out of the advisory capacity. Clients want you to use what's between your ears, but these days younger brokers don't seem to do that."--31-year veteran, Everen Securities.
INDUSTRY OUTLOOK New: "Merrill Lynch is throwing a wrench into the industry by attempting to phase out brokers and become a place to manage assets. But when all is said and done, I believe financial professionals in five or 10 years will be sought after in a big way. Even though we have the Internet and discount brokers, people with a lot of money are willing to pay for service as long as it's good quality. They will need experts around them to help what they've built. We'll be in demand more than ever."--3-year broker David Bernstein, A.G. Edwards, Huntington, N.Y.
Old: "Everything is moving toward fees--with emphasis on lower fees, gathering assets and building relationships. Plus, brokers today have to be good at insurance, know a little about estate planning and accounting. The days of dialin' and smilin' are over."--16-year broker Bill Pastella, Salomon Smith Barney, New York.