Brokers Hanging on Despite Market Turmoil
Management says business resilient, but dealers tell of ebbing confidence
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Management says business resilient, but dealers tell of ebbing confidence
By CHOW PENN NEE
29 September 2008
TURMOIL in financial markets has undoubtedly put people off investing in equities. And brokers have seen business dwindling as investors shy away.
But leading brokerages that BT spoke to are still bullish about the industry. Their heads cite people still wanting to join as dealers and remisiers - and continued hiring - as testament to the resilience of their business. Those working under them, however, tell a different story.
‘In the past three years, we’ve continued to attract young graduates as well as mid-career professionals,’ Hui Yew Ping, managing director of OCBC Securities, told BT. ‘In fact, our pool of remisiers and dealers has been growing 10 per cent a year.’
Stock cycles are an inherent characteristic of the industry, he said. And despite them, the company focuses on identifying and recruiting career brokers - ‘those committed to building a career in this industry regardless of the market cycles’.
Mr Hui said that talent is recognised and compensated accordingly.
Carol Fong, chief executive officer of CIMB-GK Securities, has not seen many brokers leaving the industry and said that the company is looking to hire and expand. ‘We have experienced a net decline of only three,’ she said, after taking into account people who have joined and those who have left. This compares favourably to about 70 remisiers in the industry who have chosen to leave, she pointed out.
Instead of scaling back business, CIMB-GK plans to boost its Singapore sales force ‘substantially’, she told BT. ‘Our target is to increase 60 headcount for equity relationship managers by end of this year.’
As for dealers, the company plans to hire 30 per cent more by the end of this year and anticipates a 100 per cent increase by end-2010. Ms Fong reckons that this is a good time to hire. ‘During the bull market, it’s hard to recruit.’
She dispels the notion that people don’t want to join the industry right now. ‘Since starting a recruitment drive, we have received over 300 applications, of which over 50 have been offered a position as equity relationship manager. We are still recruiting,’ she said.
Downplaying the tough business conditions, she added: ‘Only a small percentage - less than 10 per cent - of CIMB-GK remisiers are not doing well.’
But in the trenches, dealers and remisiers paint a different - and bleaker - picture. ‘The market turnover will tell you the whole story,’ said a broker with a local firm. ‘Volume is shrinking, confidence is down, and brokerages are looking to freeze headcount and cut costs.’
Although he agreed that the industry hasn’t seen a mass exodus of brokers, he said that this may become a trend in the coming year.
A remisier with a regional brokerage shared the same sentiment. ‘You don’t see people leaving immediately but there is the potential to leave, depending on how prolonged this downturn is,’ he said. ‘For the time being, it’s too early to throw in the towel.’
A remisier who has been in the business for 10 years said: ‘I’ve seen margin calls and damage incurred to some remisiers’ own accounts, as they have to bear full responsibility when clients can’t pay up. I’ve heard of five or six instances where remisiers have even declared bankruptcy.’
Remisiers point to a 30-50 per cent drop in commissions. Another remisier said that his commission has come down by half from two years ago and is about 10 per cent lower than last year. ‘Earnings from commissions are insufficient,’ the remisier said.
According to another remisier, ‘being in this industry is like running a marathon; you have to make enough during the fat times to survive the lean ones’.