Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 2, 1995 TAG: 9506300023
SECTION: BUSINESS PAGE: G-1 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
What most people call a stockbroker actually is a legal title signifying a registered representative of the New York Stock Exchange, according to Tyler Pugh, manager of Wheat First's Roanoke office. That comes from the series of examinations they take in order to sell various types of securities.
``It's just a title,'' Pugh said of his company's move to financial consultant.
``It really doesn't make any difference'' what they are called, said Stephen Williams, division vice president of PaineWebber, whose firm uses the term investment executive. ``They are doing the same thing. You are saying the same thing.''
The market may be up or down, but good brokers are secure in their jobs no matter what the conditions. That's because they are never laid off in a downsizing.
``Brokers are our company's major source of revenue,'' explained Peter Milward, manager of the Roanoke office of J.C. Bradford & Co. ``You don't lay them off.'' They try to work through the bad times by selling different types of investments such as treasuries, ``and hope,'' he added.
That's why most brokerage houses in the Roanoke Valley have remained at a stable number of brokers for many years. Most have grown slowly, although Merrill Lynch plans an expansion when it moves next year to larger quarters in a still-to-be-determined downtown location.
Brokerage houses agreed their ineffective account executives tend to be weeded out early, leaving in the first year or two after deciding they can't make the grade in the business.
They are also almost unanimous in saying that an account executive must have a list of 500 clients in order to be considered established. And it takes every day of at least five years to reach that pinnacle.
Lindsey Quesinberry, a broker with the Bradford company who has reached that goal, said he is never aware of the competition in the Valley when he deals with his own customers. ``It's such a large market,'' he said, ``there's lots of business to go around.''
As a general proposition, he said, the larger the account size, the more conservative the investor is. Investors don't feel pressure for much growth with a larger portfolio, where someone with a smaller account feels the need for faster growth and thus more risk.
A new broker must make cold calls to people he may not know in the quest to build a list of clients. Rookie brokers also mine for customers by direct mail, seminars and networking by membership in organizations.
Quesinberry said he no longer makes cold calls. He deals with his established customer list and builds on it largely through referrals from his existing clients and networking.
Instead, he's the one getting calls. Probably two calls a year are from head-hunters trying to tempt him through payment of a bonus to change brokerage houses, bringing his customers along.
He's been with Bradford since 1982, and he said he remains there because he likes the size of the firm and the senior management. He agrees with the company philosophy of emphasizing customer service, giving him ``freedom to do what is best for the client.''
Quesinberry reaches his office about 9:30 a.m. and seldom leaves before 7 p.m. (Seniority doesn't shorten the hours. Milward, the office manager, is at his desk from 6 a.m. to 6 p.m.)
But Quesinberry's day starts before he reaches the office - it begins when he reads the morning papers - and often continues into the night. That calculates as 11 hours daily to the job, he said.
He estimates he spends a total of two hours of his day talking on the telephone to his clients. The rest the day, or more than four-fifths of his time, is devoted to reading financial newspapers, business magazines and research reports.
The research is necessary, Quesinberry said, if he is to advise his many clients about their investment portfolios. He said he reviews every client's portfolio periodically and systematically, a job made easier with computers.
Do all investment executives work that hard? ``The good ones do,'' Milward said.
Milward said the broker's job is to search out ideas for his clients. Even in those markets when stocks are beaten down, such as in 1987 or in the early 1990s, clients still have income they want to invest.
Bad times will come, Milward said. For a good broker, bad times mean they have an incentive to work harder.
At A.G. Edwards & Sons, five brokers have been on the staff for more than a quarter-century, two of them for more than 30 years.
Richard Wertz, manager of Edwards' Roanoke office, said the company never lays off, but some brokers got out of the business when the stock market crashed for a time in 1987. ``You've got to be prepared for bad years,'' Wertz said. ``You know they're coming.''
Even a national firm such as PaineWebber has never laid off people, but Williams said that ``bad times tend to bring brokers to their own conclusions about the business.''
``It's a difficult business,'' Williams said, because it involves building relationships. Clients are not easy to find and relationships are not easy to form.
Ryland H. Hubbard Jr., manager of the local office of Merrill Lynch, said many brokers were ``weeded out'' during the market contraction of the early 1990s. But even in a bad market, he said, there are still opportunities for brokerage firms that give customers advice and service.
``We are not driven by the market. We are needs driven,'' Hubbard said. Merrill Lynch is driven by the needs of its clients, and investments are merely the by-product of the planning process for the client. ``If the market is down,'' he said, ``the client is still concerned about retirement.''
Pugh said Wheat First Butcher Singer is planning a new type of computer system that will give more complete information to brokers and clients about their assets. The system, he said, will provide clients with information about where they should go with their portfolios, not just how they should trade in the market.
``We don't pretend to be financial planners,'' Milward said, but merely account executives helping clients meet their investment objectives. Brokers, he said, must present the information that clients require to meet their investment needs.
by CNB