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??What to do with $59 million in cash??-------------------->
DJ JW Genesis Exec Sees Need For Brokers Amid
Online Hype
By Lynn Cowan
NEW YORK (Dow Jones)--Merill Lynch & Co.'s (MER) decision this week to offer
discount online trading is expected to spur a rash of similar plans on Wall Street, but JW
Genesis Financial Corp. (JWG) still sees the need to increase and nurture its broker
staff.
When Merrill announced that it would offer $29.95 online trades by December, some on
Wall Street saw it as the first admission by a bulge-bracket firm that brokers are
becoming obsolete. JW Genesis doesn't see things that way; the Boca Raton, Fla., firm
is hoping to boost its brokerage staff to 1,000 brokers and trainees from about 700 by
the end of the year, and is fairly rubbing its hands in glee over the idea of disgruntled
Merrill employees seeking greener pastures, Vice Chairman Joel Marks told Dow Jones
Newswires.
That's not to say JW Genesis isn't working on an online trading strategy, Marks said. It's
just that executives don't want to set up a Merrill-style discount-trade program alongside
its full-service brokers, Marks said.
"I think everyone was waiting to see what Merrill would do, thinking they would then do the
same thing," Marks said during a visit to the company's New York City office Thursday.
"Well, we saw it, and we're not going to do it."
While JW Genesis would consider offering its customers some online trading as part of
a broker package, forming a strategic partnership with an existing service, or possibly
setting up a stand-alone trading unit similar to Morgan Stanley Dean Witter & Co.'s
(MWD) Discover Brokerage, it doesn't want to cannibalize its traditional business with
standalone low-cost trades under the JW Genesis brand, he said.
"We'd look to use the Internet to supplement and support our brokers," Marks said,
adding: "I'm always scared to bite the hand that feeds us."
JW Genesis' strategy is likely to attract speculation now that the firm has completed the
sale of its clearing unit to Fiserve Inc. (FISV) for $59 million cash. But the new infusion of
money doesn't necessarily mean the firm will embark on an immediate spending spree,
Marks said.
"That money gives us peace of mind, security. It positions us to take advantage of
opportunities as they come up," he said.
Among the opportunities that JW Genesis sees is taking over smaller broker-dealers
that are faring poorly due to industry consolidation and competition from discount online
brokers. The money will also increase its ability to hire more brokers, who are often
concerned about financial stability outside the bulge-bracket firms. Having a cash
cushion could help allay those fears, especially if the market sours, Marks said.
"We're plodders. We're successful because we're careful. We've been studying the
Internet for many months, and, yeah, we've missed some windows of opportunity," Marks
said. "But being successful is more important than being first."
--Bill |
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