TURNING POINT
Stockbrokers Cut Workers in Past Year but Look Ahead to Better Times
By ANDREW SIMONS
Hiring at stock brokerages usually tracks the fortunes of the market. But that hasn’t been the case for Orange County stock brokerages in the past year, though they could be readying to add workers.
Employment at Orange County’s 20 largest stock brokerages fell 4% to 2,072 in the past 12 months, according to this week’s Business Journal list, which ranks brokerages by number of OC employees.
The decline translates to a loss of 82 workers. That compares to a 7% decline in employment on last year’s list.
At the same time, the number of registered representatives,stockbrokers,fell by 2% to 1,429.
To be sure, most of the cuts came last year, prior to the surge in share prices this year. With the markets at a period of inflection, stockbrokers could be poised for hiring in the next year.
It’s certainly been a great year for the equity markets. The S & P; 500 index has climbed 34% in the past 12 months, with the Dow Jones Industrial Average posting a 33% gain and the Nasdaq Composite rising 72%.
The performances mark a rebound from the past few years when billions of dollars in shareholder wealth were wiped out in one of the worst stock market downturns in recent history.
Eight brokerages reported cutting workers in the past year; eight said they boosted employment and two reported no change. Two brokerages didn’t provide numbers and are estimates.
No. 1 Merrill Lynch & Co. in Costa Mesa maintained the top spot on the list, despite cutting 10% of its OC workforce to 351. Merrill’s local broker count also declined, off 22% to 215.
Merrill has closed branches and streamlined operations. Last summer it closed its office in Newport Center,a hub for financial services,and moved workers to Newport Beach’s MacArthur Court on the Irvine border.
Before that, Merrill closed two Irvine offices and a San Juan Capistrano operation.
Leases for the closed offices were up and renewing them didn’t make sense, said the company’s director of Newport operations, Ronald Meraz, in a past interview.
No. 2 Smith Barney Inc., a unit of N.Y.-based Citigroup Inc. moved up a spot with a 7% growth in OC workers to 311. It also boosted its broker count 8% to 196.
No. 3 Morgan Stanley fell a spot with a 10% decline in total workers to 310. Morgan Stanley increased its stable of brokers, though, with an 8% increase to 298.
A smattering of stockbrokers, such as No. 6 A.G. Edwards & Sons Inc. in Irvine, No. 8 Finance 500 Inc. in Irvine, No. 10 Charles Schwab & Co. in Laguna Hills and No. 11 The Seidler Cos. in Irvine, increased their overall OC employment by a nominal amount.
Consolidation,always a trend in the investment sector,continued to play out this year. No. 5 Wachovia Securities LLC joined the list after buying Prudential Securities Inc. and First Union Securities since the Business Journal last published its stockbroker list in February 2002. Wachovia reported 169 OC workers, including 107 brokers.
No. 7 Newport Beach-based Roth Capital Partners LLC fell two spots with an 11% decrease in county employment to 93. Roth has 26 brokers. It’s the largest homegrown stock brokerage on the list.
Roth Capital said it’s seeing more deal activity of late, particularly with secondary stock offerings and private placements.
No. 15 Wedbush Morgan Securities Inc. in Newport Beach said it’s seen a pickup from last year.
“It looks like things are continuing (to improve),” said Richard Lanni, a Wedbush senior vice president and head of its Newport Beach office.
Recent stock market gains have started to draw investors off the sidelines. Wedbush says it’s aggressively hiring brokers and has opened a new office in San Diego to reflect a stronger stock market.
Will the returns continue?
“We’re watching the earnings,” Lanni said. “The trend in earnings has tended to back up price/earnings ratios in the market.”
No. 11 Raymond James Financial Services Inc. in Irvine grew its OC workers by 50% to 45 and its brokers by the same ratio to 30.
Matt DeWeese, Raymond James’ branch manager in Irvine, said September was a record month. “Revenue and fees were up 26% from September of 2002.”
DeWeese likes what he sees in the market.
“Back in March we had the wrangle over in Iraq and other events,” DeWeese said. “But moving into October, you’re seeing some real movement. Earnings and the economy are improving with the backdrop of low interest rates.”
No. 9 Irvine-based Brookstreet Securities Corp. bumped employment up slightly to 54 while keeping its brokers stable at 80. Brookstreet counts more brokers than employees because it contracts with independent brokers who use the company’s name.
Stockbrokers who saw OC employment fall included No. 16 RBC Dain Rauscher Corp. in Newport Beach, with a 6% drop in employment to 30 workers; No. 17 Corona del Mar-based Mischler Financial Group Inc., which shed 20% of its workforce to 20 workers; and No. 19 TD Waterhouse Group Inc. in Orange, which cut employment by 12% to 15.
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