They're creating more pimps on the streets. Here's the news:
Brokerage Firms Are Increasing Pep Talks, Echoing 1987 Strategy
By LYNN COWAN
Dow Jones Newswires
WASHINGTON -- Talking to investors about their stock portfolios during a crummy market is as much fun as riding a Ferris wheel with a hangover.
Recognizing this, Wall Street companies are trying to rally their trench troops -- brokers -- with a barrage of motivational broadcasts and frenetic tours by top executives of branch offices across the country. The pep talks are occurring at a level that hasn't been seen since the stock market crash of 1987, say executives, and they have a single purpose: calming brokers and investors rattled by the current market.
Retail brokerage executives at Morgan Stanley Dean Witter & Co. are in the middle of a 10-day nationwide tour this week to a quarter of the company's 525 branch offices. They're telling brokers to call all their clients to talk about the market and their portfolios. Citigroup Inc.'s Salomon Smith Barney unit launched a multiweek road trip on March 8 featuring strategists, portfolio managers and a head trader, and is trotting out star brokers to share coping strategies with their peers in different cities. Merrill Lynch & Co., the largest U.S. company in terms of the number of brokers, began increasing its output of internal television broadcasts last week to its sales force, explaining what was occurring in the market and how to talk to clients about it.
The main message from all three companies to their brokers: Make sure you're calling clients to offer reassurance before they come seeking it. The theme for investors: Yep, it's a scary time now, but if you hang tight long enough, your portfolio should reach a happy ending.
Although brokerage companies schedule field visits by executives throughout the year, and regularly broadcast analysts' comments on internal television channels, organizations say they have stepped up the pace in recent weeks as the market grew claws and sharp, pointy teeth. Andrew Koerner, a Salomon Smith Barney broker in Lawrenceville, N.J., was asked twice last year to talk to other branches about his approach to interacting with clients. He is now scheduled to make six such visits over the next two months to emphasize the importance of staying in touch with investors and holding what he calls managed money dinners -- restaurant meals with a client's family and outside advisors, such as lawyers and accountants.
Mr. Koerner, who says the most important calls he has made in the past three years have been to warn stock-rich customers not to expect 30% annual returns forever, said newer investors have required more of his attention in recent months.
"The clients who have opened up accounts here since the summer of 2000, they haven't experienced a single up day with me. Those are the ones who require a lot more hand holding, because they haven't seen a blip of upside" in their portfolios, he said. While older clients have talked to him about market cycles during good times and bad, it takes a little more to convince new entrants that his ideas will translate into profits someday, he said.
Besides visits by Mr. Koerner and other top brokers, Salomon Smith Barney's retail executives are touring each of the company's 24 U.S. regions over the next several weeks to address its more than 500 branches. The featured performers -- including U.S. equity strategist John Manley, model portfolio chief Lou Romanucci and retail equity trading head Nick Angilletta -- also are planning to squeeze in client visits and public seminars during their trips.
Morgan Stanley has a similar roster planned for a whirlwind tour of 125 branch offices. The tour, that began last week and wraps up next week, includes John Schaefer, president of the retail brokerage group; Mitch Merin, president of the asset management unit; Dick Powers, president of Van Kampen, the mutual fund group owned by Morgan Stanley; Bruce Alonso, head of the branch office system; and Steven Miller, managing director and head of private wealth management.
Merrill said it is relying on more internal broadcasts and publications to communicate with brokers and investors, and hasn't increased its field visits.
Of concern for all three companies are the 30-something brokers and their customers. Some of those younger brokers may have been in high school or college during the last market downturn in 1987. Steve Liguori, executive vice president for marketing for Morgan Stanley's retail brokerage group, said younger brokers need reassurance that it is all right to talk about long-term performance in the face of dreadful short-term results.
"There's a lot of young brokers in the business who have never seen anything like this. We hear questions from them like, 'I don't know what to say to my clients'," about the state of their investments, he said.
"The key part of our message is to keep this in perspective, keep your head on your shoulders, this is exactly the time investors need to talk to you," Mr. Liguori said.
Merrill, Morgan Stanley and Salomon Smith Barney also are emphasizing the value of using a full-service broker during a down market, when investors want more advice and in-depth research. Steven Narker, director of research for Merrill Lynch's private client group, acknowledged that some full-service customers are ticked off that they didn't get any warning about the downturn from Wall Street research analysts or their brokers. But he said that group is countered by the do-it-yourselfers who also got slammed and are looking for help with their portfolios.
"I think what we're seeing now is, yes, people like to blame someone" for their losses, Mr. Narker said. "But when they look in the mirror, they come to the realization that everyone got caught by surprise."
Write to Lynn Cowan at lynn.cowan@dowjones.com. |
