Registered Rep.'s 2008 Broker Report Cards: Dear Management, Thanks For Nothing.

Dec 1, 2008 12:00 PM, By Christina Mucciolo

In our 18th annual Broker Report Card survey, wirehouse FAs say they are fed up with management ruining their excellent franchises and platforms. Will the great advisor diaspora begin?

Tweet

Article tools
sponsored by:

Sign Up for Registered Rep. Newsletters

---

PRESTIGE OF FIRM MANAGEMENT TAKES A DIP

Over all, FAs' opinions of management declined from last year — some more than others. The mean score for how mortgage-related write-downs have affected relationships with management was 2.4. The firms most affected were Wachovia (51 percent), Citigroup (50 percent), UBS (48 percent) and Merrill Lynch (43 percent).

Q: How have mortgage-related write-downs affected your relationship with management?

WE'RE NO. 1 — SERIOUSLY

Although it seems odd, besides BofA and UBS, a majority of respondents believe their firm is the best to work for. (As we noted in the “I'm with Stupid” table, the bulk of the survey was conducted over the summer, so it doesn't reflect the BofA/Merrill deal and other recent news.)

PLUMMETING PRESTIGE

This year's Registered Rep. Broker Report Cards found a general souring of advisors' opinions of their firms. This is not surprising given that some nearly went out of business. Edward Jones was the notable exception. In general, reps say they're not happy with management — their overall rating of their employer's performance saw the largest drop (almost an entire point) from 8.4 last year to 7.5. The survey was conducted from June 14 to September 22.

After September 15, the day that Merrill announced its hasty marriage to Bank of America and Lehman Bros. filed for bankruptcy protection, respondents began to give their firms even lower “grades.” While the sample was small (just 59 after that date), the average FA overall approval rating went from 7.4 to 7.1. Here's how reps rated their firms on work environment, compliance support and management on a scale of 1 to 10.

THE AUCTION-RATE FREEZE HURTS

Auction-rate securities lawsuits cost firms $485 million in fines, in addition to a giant hit to their reputation. About $54.3 billion in assets were disgorged back to retail clients. But ARS affected some firms (UBS, ML, MS) more than others (Ed Jones), since ARSs are strictly for the high-net-worth set. While 55 percent of respondents indicate they do not have clients affected by auction-rate securities, for those who did, 9 percent said that their firm was “not at all helpful“ in resolving them. Some 18 percent indicated their firm has been “somewhat helpful,” but not necessarily at first (Citi was the first to address the problem). Most firms returned clients' ARS money, but only after bad press and outright pressure from regulators.

Q: If you have clients in auction-rate securities (ARS), how helpful has your firm been as you manage your relationship with clients?