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Junior Brokers Thrive Amid Market Turmoil


With million-dollar producers getting hammered, it might seem that junior brokers would be suffering even more. After all, they do not have the experience to provide perspective, and few have a large clientele that will stick with them.

Nevertheless, young talent is one of the few bright spots in this recession.

Most of the assumptions about this market being tough on young reps are backward, experts say. True, rookies often don't have big books of business or long-standing clients, but all that really means is that they don't have angry clients used to getting spectacular results, and that they can concentrate on serving the accounts that they do have.

"There is the old adage that in crisis there is opportunity," says Paul A. Werlin, founder and president of Human Capital Resources of St. Petersburg, Fla.

"If you look at what is really going on, for most reps, in all channels, this is the first serious bear market they have ever experienced," he said. "It is particularly important for junior brokers not to panic, not to get depressed and to keep their perspective."

Before Werlin was a consultant, he was a Series 7 broker, and he says, without reservation, that "it is easier to develop new relationships when things are crummy. No matter what, people need advice - now more than ever. An awful lot of clients are very disillusioned with their current brokers, so this is a great time to make contacts." Advice that is said to be serving mid-tier, boutique and fixed-income fund companies as well.

Rise to the Occasion'

The key, Werlin added, is not to over commit. "Promise that you will stay in touch, and that, together, you can grow a customer's assets," he suggested. "For juniors, the most important thing is to develop a plan, even a modest one, and take it to your manager. Don't wait for him to come to you. Rise to the occasion."

Some program managers may feel satisfied because they see all of their reps on the phone, but insiders say that brokers used to grossing $60,000 each month are getting gloomy. They're not calling their clients, Werlin said, they're calling their friends and their spouses.

"The burden is on the program managers to keep spirits up and to get prospects in," he said. "The fundamentals have never been more important. Get clients on the phone, do seminars, get them into your office."

This is also a great time for seminars. A lot of people who were sold a lot of bad investments via the Internet, mail and telephone are now leery of any kind of pitch. However, a soft-sell seminar with an emphasis on education can calm current customers' fears and bring in likely prospects. It also provides something positive for brokers, to help boost morale, and makes an excellent point of contact for working with vendor reps and mutual fund wholesalers.

They, too, have been hit hard, and will most likely jump at any cooperative effort by a broker. This is the worst time to be cold calling, so, instead, offer warm bodies and hot coffee. In fact, besides the financial planners that Lake Partners, a money management firm in Greenwich, Conn., attracted to a hedge-fund meeting at the Harvard Club in Manhattan late last month [see MFMN 12/2/02], the firm invited high-net-worth investors, advertising the event in local papers.

Michael Mortensen, president of PNC Brokerage of Pittsburgh, agreed, saying: "The phone gets heavy at times like these. It is the biggest challenge we have. We try to get folks to stay in touch with all of their customers, and that is just too big a job for the seniors to do by themselves.

"We have to get to the C and D customers, who would not ordinarily be contacted. We have actually hired 40 junior brokers this year; that is where the growth is coming from," Mortensen said. And the young blood is paying off. " revenues are up 20% year-to-date," Mortensen said.

That's the other surprise. Down markets are great times to adjust payout grids and incentive plans. It is also a great time to recruit. Signing bonuses are gone. And a rep will be less hesitant to leave an old book of business for a fresh start. Bigger programs with larger staffs and overhead are often eager to trim headcount and costs, so smaller programs can often attract rising stars.

"We are providing extra training for our newer reps," Mortensen said. "This is especially important on insurance and other new products that we have had trouble getting our senior folks to pay attention to. That builds bench strength. Reps now have a chance to move up on their own merits and create growth. We have even carved out some new territories and partnerships. It is exciting to see the seniors take them under their wing."