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Industry Spotlight > Broker Dealers

Brokers Share Mixed Feelings, as BD Stock Index Rebounds

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Brokers say they are happier today than they were last year, especially in terms of compensation. Many, though, would switch the type of firm they are affiliated with, if they were to change firms. Meanwhile, the stocks of many large brokerages — as tracked by the Amex Broker Dealer Index (XBD) — have risen considerably in the past few months, as the markets have strengthened and lifted BD results.

Now in its second year, results collected as part of the National Financial Broker Sentiment Index reveal that brokers are slightly more satisfied in ’06 than in ’05: the index — which gauges the views of more than 1,000 reps — stands at 7.7, up from 7.5 a year ago. Most say they are committed to their present BD.

Nonetheless, 60 percent express a desire to move to another type of firm in the event that they exit their current firm. One-third would rather work for an independent firm, 18 percent for an RIA and 11 percent for a wirehouse.

Nearly 60 percent are pleased with their compensation, though 23 percent would prefer that their pay be fee-based. Some three-fourths of reps say their job satisfaction is closely tied to the performance of the firms where they work and they are “very satisfied” with the firms.

Overall, broker-dealers are doing quite well, judging from the recent trading level of the Amex Broker Dealer Index. The index traded near 237 on Nov. 7. That’s a tad below its year-to-date high of 241 in April, but it’s a 23 percent gain from its year-to-date low of roughly 193 in June.

The current market conditions and strong showing of financial-sector stocks have prompted reps and other brokerage staff to raise their expectations for ’06 bonuses, observers note.


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