Stockbrokers Glum at Life in the Slow Lane

How gloomy are stockbrokers? They’re so gloomy, said Hardwick Simmons, head of retail operations for Shearson Lehman Hutton, that “the biggest confidence problem we have is with our own people, not with our investors.”

Simmons, the new chairman of the Securities Industry Assn., was describing the difficulty of motivating brokers to stay in touch with clients at a time when many of those clients have lost all interest in stocks.

Simmons’ story was echoed by many of the movers and shakers of the securities industry, who have gathered for their annual meeting at the Boca Raton Hotel & Club.

Universally, brokerage-house officials are gloomy about the yearlong slowdown in stock market activity that has prompted layoffs and belt tightening and does not seem to be near an end.

Simmons estimated that two-thirds of his firm’s brokers came into the business after the severe bear market of 1974-75; thus they had not experienced a comparable market slowdown until now.

He said he was working with the discouraged brokers to convince them that “this, too, shall pass.”

It isn’t that Shearson Lehman lacks money, he said. Investor assets that it handles total $155 billion, $10 billion more than before the market crash in October, 1987.

But 60% of that money used to be in stocks, while 40% was in fixed-income investments. Today, only 35% is in stocks, and 65% is in fixed-income investments, he said.

Much of the fixed-income money has gone into bank certificates of deposit, which have become one of the securities industry’s biggest sellers.

Lower Ratio

Because fixed-income investments are rarely moved, unlike money invested in stocks, Shearson has suffered a major loss of revenue, Simmons said.

For every $1 of customer assets, he said, Shearson used to take in 1.8 to 2 cents in revenue. That has dropped to 1.3 cents, he said.

Shearson, along with other Wall Street firms, has cut back on staff, recently announcing a 1,400-person reduction in its 41,000-member work force.

Especially hard hit have been firms that specialize in growth stocks, or shares of rapidly growing companies. Such stocks often have more potential than blue chips but also carry greater risk.

Gordon S. Macklin, co-chairman of Hambrecht & Quist of San Francisco, which specializes in such stocks, characterized the market climate as “very tough” for equity investments. “It’s an even tougher climate for those oriented toward growth. And it’s extremely difficult for emerging growth companies,” he said. Equity business was down 25% to 30%, he said.

“There is clearly a volume and profitability problem that is industrywide,” he said.