THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, January 22, 1996 TAG: 9601200390
SECTION: BUSINESS WEEKLY PAGE: 32 EDITION: FINAL
SERIES: Forecast 1996
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 60 lines
Lured by the stock market's record-setting gains, small investors poured billions of dollars into mutual funds and individual stocks throughout 1995.
Several securities firms in Hampton Roads responded by hiring additional stockbrokers, and Charlotte-based Interstate/Johnson Lane opened an office in Virginia Beach, its first in the region.
Brokers are predicting a healthy market for most of 1996. But they also caution customers not to expect the sorts of gains witnessed last year, when the Standard & Poor's 500 index climbed 34 percent and the Nasdaq composite index soared almost 40 percent.
``We all got a little spoiled in 1995,'' said Aubrey Ellis, co-manager of the A.G. Edwards & Sons office in Norfolk.
If a sustained drop in the stock prices does materialize, brokers in Hampton Roads figure they can hold onto most of their customers. That's because members of the ``baby boom'' generation are thinking more seriously about their retirement needs rather than quick gains.
``That accounts for a bigger segment of our business than the trader who is in and out'' of the market, said Thomas Love, senior vice president and manager of the Wheat First Butcher Singer office in Norfolk. ``Seventy percent of our revenues are coming from conservative, long-term investors.''
But brokers will have to contend with more than the possibility of a market downturn this year.
One concern is the Securities and Exchange Commission's heightened scrutiny of brokers' sales practices. The SEC has put pressure on the industry to eliminate abusive techniques and to weed out those brokers who have chronic disciplinary problems.
``I don't think (the regulatory climate) is going to be any easier'' in 1996, Ellis predicted.
Meanwhile, commercial banks are chipping away at the brokerage business by aggressively promoting their own mutual funds and investment services. First Union Corp., for example, has expanded its mutual-fund operation and installed personnel licensed to sell mutual funds in First Union bank branches.
In an effort to hold onto their customers, some larger brokerage firms have already invaded the turf of commercial banks by offering residential mortgage loans and small-business loans.
But the emphasis throughout the financial services industry will be the management of investors' assets for a fee.
Legg Mason Inc., whose regional brokerage firm Legg Mason Wood Walker has offices in Norfolk and Newport News, recently bought a Cincinnati money management firm that oversees $2.2 billion of assets. In December, Baltimore-based Legg Mason agreed to acquire the London money management subsidiary of investment bankers Lehman Brothers Inc. ILLUSTRATION: Color photo by Martin Smith-Rodden\The Virginian-Pilot
"We all got a little spoiled in 1995," says Aubrey Ellis, co-manager
of a A.G. Edwards' office in Norfolk.
by CNB