Stock Brokerages Log Another Year of Cuts
By RAJIV VYAS
Remember Charles Schwab, founder of Charles Schwab & Co.?
He became a household name last year because of his commercials preaching the gospel of taking a long-term investing approach. But no matter what stock brokerages say, it seems impossible for this fraternity to think beyond tomorrow.
If the market is humming, then brokerages are hiring like crazy. But if the stock market is down,like it has been for the past two years,then they resort to hiring freezes and layoffs.
That was the case in Orange County last year as the 20 largest brokerages here saw employment fall 7%, or by 186 jobs, to 2,321 local workers, according to this week’s Business Journal list.
Despite the overall decline, the number of OC brokers rose by 1%, or 13 people, to 1,641, perhaps in anticipation of a market rebound this year.
No. 2 Morgan Stanley Dean Witter & Co. and a few small brokerage firms accounted for the rise. Morgan Stanley added 49 brokers, while smaller firms added another 52.
But still other firms continued to shed brokers last year. No. 1 Merrill Lynch & Co. cut 44 jobs, including 15 brokers, at its OC offices. The New York-based company counts 450 local workers, down 9% from a year ago. Last year, Merrill had reduced its headcount by 2%.
Almost half of the firms scaled back operations last year as the market tumbled and investors headed for the sidelines
“Some of the major firms have done a tremendous amount of growth over the last four to five years,” said Richard Lanni, senior vice president and divisional manager at Los Angeles-based Wedbush Morgan Securities. “But the retail business was lower in 2000 and substantially down last year.”
When it came to cutting jobs, No. 10 San Francisco-based Charles Schwab was the most aggressive. The discount brokerage firm, which is trying to position itself as a full-service financial planner, cut its OC workforce by 26%, or 18 workers. It counts 51 OC employees and fell a notch from last year’s list.
No. 3 New York-based Salomon Smith Barney, part of Citigroup Inc., was more ruthless when it came to slashing jobs. Salomon saw its OC employees shrink to 320 from 379 in the previous year, dropping the company down a notch from No. 2 on last year’s list.
Salomon’s cuts were enough to help Morgan Stanley leapfrog from No. 3 last year to No. 2 this time around. Even as Morgan Stanley added brokers, it still cut 5% of its local staff for a total of 330 OC workers.
No. 5 Newport Beach-based Roth Capital Partners LLC, OC’s locally based investment bank and brokerage, also showed signs of retrenchment.
The firm reduced its workforce by 16%, or 24 people, and went from 59 brokers a year ago to 41 today.
No. 15 RBC Dain Rauscher Inc., part of Toronto’s RBC Financial Group, doubled the number of brokers in OC to 40. RBC also increased its overall headcount by 14% to 40 people. The gains came from RBC’s buy of Tucker Anthony Sutro Corp., which had an OC office.
“It has been definitely a tough year,” said Lance Hicks, president of No. 9 Finance 500 Inc. an Irvine-based brokerage.
Hicks said the stock market has impacted his firm, which added two workers in 2001, including one broker, for a total of 62 people.
“But our fixed income and institutional business grew substantially,” Hicks said. “So we have done decently.”
Los Angeles-based Wedbush Morgan Securities added two jobs, including a broker. Wedbush’s Lanni said that the company continues to expand and the firm is taking some extra office space for additional brokers. “Being conservative and small we are taking advantage of the current market conditions,” he said.
