LM to SB

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Dec 4, 2005 10:16 am

Well, I’m now with Smith Barney, after being traded for Legg Mason. I went to a SB office on Friday, and the Tech on the desktop is light years ahead of LM! The benefits are WAY much better, and to be frank, I’m really looking forward to the change. LM is a good shop, but clients and prospects know the SB name. The comp is about the same. I think the leadership on both sides of trade have done a good job from day one of the announcement. I’m somewhat suprised at the folks that left, because we got a retention bonus to move, and signed a contract. The contract has NO language in it about non compete. I think I’ll try it a couple of years and then make a decision. So far so good!

Dec 4, 2005 11:58 am

How does it feel to be one of 14,000?

The two main selling points we have heard since the deal was announced was 1) how great their “systems” are, and 2) that you’ll be able to make loans to your clients.

Systems… Who cares? You won’t use half of them anyway. SB spent money on these “systems” so they wouldn’t have to spend it on staffing. You’ll be entering your bond trades anonymously online, and never speak to a trader. They won’t know, or care, who you are.

My clients can get a loan if they need one, ANYWHERE. I don’t want to be the guy who rejects a clients application, or the guy collecting payments on others. They don’t pay me enough for that. Also, when the write-downs start flowing in, we’ll see how happy SB is with the margins on that business…

If you are a captive to LM funds (how devious was that?) you have little choice but to stay, so keep rationalizing this transaction.

Unfortunately, the powers that be at LM have been planning to drop retail business for YEARS. Chip is a phony, with his crocodile tears at the announcement. Clearly, the market loves it: the stock has risen dramatically, so the sale is easy to justify with hindsight. Maybe there was a third way to do this via a spin-off, or a buyout. We’ll never know. Problem was, LMWW had hand-picked stooges in position at top management, who did anything they were told. Remember, LMWW was profitable, with nearly 20% operating margins!

It’s unfortunate, because I think our industry could use a few more mid-sized regionals with good reputations to compete with the likes of SB and Merrill.


Dec 4, 2005 3:05 pm

How does it feel to be one of 14,000?  Not bad.  It just depends on your mindset.  I think one can compare it to belonging/attending a big college.  You must find your own group of friends in your office or region.

With regards to the system, I care.  It will cut my work in half and the staff hired by SB are mostly series 7.  Therefore, I will have more opportunities to get myself in front of people out of the office vs. worrying about trades done/not done when I am out.  Also, if you do enough trades and have questions, you will be talking to traders and marketing people.  Believe me, they care because you are their clients.  (I have talked to people in both cases and they are busy, but are polite)

Loans: SB has been in the business for years and it has worked for out for them. 

Lm  Funds: Great funds but nobody was forced to do them.  How can one be captive to LM funds unless you are because of performance.  Performance is not a bad reason to be captive to anything.

Everyone knew Chip's reason for swapping LM brokers to SB/Citigroup; The Shareholders.  If you worked for LM, you always had an opportunity to have LM stock which was and will be rewarded by the performance. 

Overall, I think most people are glad to work for SB.  If not, they have already left.  The last time I read, 97% stayed.  The others, most of them were looking for a reason to leave and this gave them the reason.

Dec 5, 2005 10:07 am

I came from MWD last year because of the management at the firm. Top to bottom they have a long way to go at MWD even with "Mack the knife". I came from 10,000+ brokers to 1,400, it was, let's say going backwards. Paper tickets? Nobody knew the name. Part of the 14,000, yep! In my humble opinion, there will be only 4 firms when it's all over.

After seeing the LM management in action and Chip's decision, I think the "Supermarket" approach is DOA. Conflict of interest, etc. Focus on the client with the tools needed. NOT spending time at the printer.

Yes, I can now spend more time prospecting, talking to my clients, etc, instead of chasing down a dividend, etc. Time management.

Dec 5, 2005 11:55 am

Selling the dividend huh? ha