SEARCH IS ON FOR GRAY HAIRS: PAINEWEBBER, SMITH BARNEY, PRU GO FOR CAREER CHANGERS, NOT PUPS
In early 1997, Donald Gross was at a crossroads. The 51-year-old had just sold his office equipment business…
In early 1997, Donald Gross was at a crossroads. The 51-year-old had just sold his office equipment business and was considering, reluctantly, resuming a 20-year career in banking.
Then one day Mr. Gross picked up the phone and started calling brokerage houses. He wondered if they would be interested in hiring a middle-aged banker with aspirations of becoming a stockbroker.
“I had a strong background in financial services, and I was already helping friends and family with their portfolios,” says Mr. Gross, a former Chemical Bank branch manager. “It seemed like a natural fit.”
The fit was best at PaineWebber Inc. Not only was PaineWebber in the market for brokers — the firm hired 600 last year and plans to add another 1,200 in 1998 — it has made career-changers its top recruiting priority. Half of the firm’s new hires are pursuing second or third careers.
No longer mere stock-pickers, today’s brokers are marketed as full-service financial consultants. Who better to offer advice on savings for retirement or the kids’ tuition than a 51-year-old family man like Mr. Gross?
“If you’re going to hold yourself out as a consultant, that implies wisdom and experience,” says Robert Clark, PaineWebber’s director of marketing and strategic initiatives. “That’s why people who have enjoyed success in other businesses — be it law or banking or accounting or engineering — appear very attractive to us.”
PaineWebber is hardly the first to hit upon this strategy. Merrill Lynch & Co. and Prudential Securities Inc. have been targeting career-changers for at least five years. Since 1992, more than 80% percent of Prudential’s new brokers have come from other fields.
Salomon Smith Barney Inc. is another recent convert: 75% of its recruits are now over the age of 30, vs. only 33% five years ago.
“We need to have financial consultants who can empathize with clients’ needs,” says Scotty King, director of Smith Barney’s broker training program.
PaineWebber wan
ts to increase its assets under management to $500 billion from $300 billion by 2000, boosting its sales force to 8,000 along the way. That means hiring 1,700 brokers and there just aren’t that many veterans available to raid.
“Over the past 18 months, it’s become more difficult to find brokers,” says Samuel Liss, an equity analyst who follows PaineWebber for Credit Suisse First Boston.
With the stock market booming, firms are doing everything in their power to hold on to productive employees. “The annual turnover rate for brokers is around 15%,” Mr. Liss adds. “Turnover has gone to around 8% to 10%, about as low as it gets.”
A veteran broker earns between $100,000 and $300,000 annually. Established brokers are productive from day one, while it can take years for trainees to earn their keep.
“Firms are trying to access the wealth of folks who tend to be older,” says Sallie Krawcheck, a securities industry analyst with Sanford C. Bernstein & Co. “Putting someone who is 24 years old across the table from someone who’s 56 does not always work.”
friends can pay off
Career-changers also tend to know people with money. Now a trainee at PaineWebber’s 140 Broadway office, Mr. Gross anticipates doing business with many former clients from his days at Chemical.
“The people I’ve talked to have been receptive because they know I’m not someone who is just going to push products on them,” he says.
But career-changers can underestimate how difficult it will be to convert friends into clients.
Christopher Shipp, Prudential’s director of training and professional development, says “the client must see the broker as someone who can be a resource in planning for their retirement. Establishing that kind of credibility takes time.”
Crain News Service
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