Smaller investment brokerages benefit from financial turmoil - Business First of Louisville:

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This recession was created mostly by variouzs sectors of the financialservices industry, including investmeng banks, money center banks and mortgage companies. The big financialk companies and stocks across the board have takebna beating. “The whole industry is just goinb through somuch turmoil,” said Larry Hansen, a partner in Capital Planningh Advisors Inc., an independent investment advisoryy and financial planning firm. Brokers are feelingf squeezed as they facelowetr commissions, reduced reimbursement ratexs and discounted payout rates at many of the big Hansen said. “The companies are tightening their and they are losing peoplew becauseof it.
” Some brokers will get out of the businese and others will go independenrt as investment advisers. “The brokeragesz are like an analogy of the entirweeconomy we’re in right said Jim McCarthy, chief operating officer of in Rose­ville. “Itg feeds on itself. There is a and then a pause, and then anothetr decline. It is reshaping the industry. The old traditionaol investment housesare disappearing.” The most turmoil is at the big, traditional brokerages, wherse consolidations are still to be completed and trust is waning, Hansen said.
“There is a repudiation of the wire housew that is a rallying cry abou t what is in the best interests of the Hansen said, adding that he has increasinglt been hearing from people who have been callec too often by big investmenft firms pushing an in-house “After a few too many they start to wonder: Is it the best asset for me to pick up? Or is it in the best interesr of the investment firm to sell it to somebody?” Hansej said. “I know that sounds pessimistic, but that is the substance of the perceptiob that isout there.
” Whatever perceptions may exist, consolidationws are a definite reality, with the shifting landscapew of Wall Street’s financial services reverberating througbh the region’s financial centers, such as downtown Roseville and Folsom. A.G. Edwards, which used to have officess here, was bought in 2007 by , which also had offices locally. Wachovia then was bought by in December, and the Wachoviq Securities offices are now officeds of WellsFargo Advisors. The Citigroup investment group is being merged into MorganStanley & Co.
in a deal set to close later this , which has long had officess locally, was bought by in the BofA does some investment saless through its banks and itsinvestment division, . When the mergetr is completed with BofA, the Merril l Lynch name and offices locally willbe retained, said Bill spokesman for Merrill Lynch. “You are going to see some prettu serious consolidation inour industry,” said Steve president of Hanson McClain Advisorsa Inc., an independent investment and retirement planningy company. “There hasn’t been much consolidation and now the industry is being forcedxinto it.
” That has pushed a lot of businesas toward the smaller brokerages and investment Hanson McClain has been growing its business so far this with more people seeking to become clients than any year othe r than 2002, Burnett said. “You have a lot of people challenge their financial relationship when the marketis difficult,” he said, adding that the periof between last September and March “changed the retirement outlook for a lot of people.” In many clients have moved investments into “The challenge (for brokerages) will be to get theier clients to move back into the (stock) Hansen said.
“They can’t charge management fees for Not only are the big brokerages losing stocik businessto cash, they are losingy business outright to other players. saw $97 milliohn in new deposits flow into the bank in the firsy three months ofthe year, said Stevw Fleming, president of the bank, much of it moving out of investment accounts at brokerages and into insured accountsx at the bank.