What’s the best measure of the stock market? Swings in the major indexes?
As good an indication as any is hiring at stock brokerage firms. If the market is humming, investors are buying stocks and fueling brokerage hiring. If investors are suffering losses,like they have in the past year,firms may have to resort to hiring freezes or layoffs to offset the fall in their businesses.
As such, 2000 wasn’t anything to talk about for brokerages in Orange County. The 20 largest firms saw employment fall marginally, or by five jobs, to 2,459 OC workers, according to this week’s Business Journal list. The number of registered representatives rose by 3%, or 43 jobs, to 1,583 people.
“It was a very tough environment for clients to make money,” said Randy Beckman, branch manager at No. 8 A.G. Edwards & Sons Inc. “People became cautious and conservative as the markets became volatile.”
St. Louis-based A.G. Edwards shed 4% of its OC staff last year and dropped from No. 7 on last year’s list with 112 employees today. In 2000, A.G. Edwards also cut its staff by 2%.
Besides A.G. Edwards, other big brokerages reduced their workforces or froze hiring. Almost half of the firms scaled back operations last year as the market tumbled and investors headed for the sidelines.
New York-based Merrill Lynch & Co., which retained its No. 1 position, cut eight jobs at its OC offices. It counts 494 local employees, down 2% from a year ago.
“There has been a slowdown in Nasdaq-type trading,” said Pete Case, director for Merrill Lynch in Southern California.
Morgan Stanley Dean Witter & Co., another New York-based firm, cut 7% of its local staff. Its total number of employees here fell to 346 from 374. The company’s ranking dropped a notch to No. 3.
Prudential Securities Inc. of New York also scaled back. The company counts 60 fewer employees here this year after closing its Laguna Niguel office last year. The OC brokers relocated to Los Angeles offices. Prudential dropped a slot to No. 6.
“We had a record-breaking first half but a slow second half,” said Bill Scott, Prudential’s regional development officer.
OC’s homegrown investment bank, Roth Capital Partners Inc. of Newport Beach, shed three jobs in the past year and ranked No. 5, down one from last year.
While most of the top firms scaled back, some smaller ones were hiring.
Los Angeles-based Seidler Hagerty Stewart,created by the January acquisition of OC-based Hagerty Stewart by The Seidler Cos.,saw an 80% surge in local employees, adding 20 people from Seidler’s LA operation for a total of 45 in Irvine. It ranks No. 14, up three spots from last year.
Pasadena-based Western International Securities added six people for a total of 16 in Orange.
“There was an overall slowdown in 2000 for the industry,” said Richard Gilliland, executive vice president and branch manager of OC operations at Western. “But we managed to grow our bottom line and business here.”
Western made it onto the list this year replacing Fountain Valley-based Providential Securities Inc., which fell off after surrendering its license and closing down in October amid National Association of Securities Dealers Inc. restrictions and fraud charges.
Mid-size firm First Union Securities Inc. added 18 people for a total of 101 in OC.
“We had a record year last year in revenue and in recruiting,” said Rick Holm, regional sales manager for the western region at First Union. The Richmond, Va.-based firm ranked No. 7, up a notch.
Among large firms, New York-based Salomon Smith Barney boosted its OC staff by 11%, or 39 people, for a total of 379. This increase also moved Salomon up a notch to No. 2.
“We have no plans to scale back,” said Bob Martensen, senior vice president for Salomon Smith Barney Private Client Group. “We are exploring additional areas in OC to grow.”
Also, while Merrill Lynch had a decline in employees, it increased registered representatives or employees registered with NASD. The firm’s registered representatives rose by 5%, or 15 people.
Merrill’s Case said he sees a better 2001. His firm, like others, is shifting the way it deals with its clients. Merrill is focusing more on fee-based money management services rather than charging clients for each trade.
“We will be launching some new services for high-net-worth individuals soon,” he said.
Brokerage hiring trends not only indicate how the year gone by was for investors but also act a barometer for coming months. If securities firms were bullish despite the market’s fall, they likely would continue hiring. The collective jobs decline at local brokerages could suggest they still are unsure about 2001. n
