Eager to tap the wealth generated by Los Angeles' booming housing market, brokerage firms, banks and insurance companies are increasing the ranks of stockbrokers, which swelled an eye-popping 16 percent last year.
Hiring more stockbrokers has less to do with a rising stock market than it does with the strategies of most financial services firms to increase fee income. Many firms also are gearing up to pitch investment products to the millions of Baby Boomers set to retire in the next five to 15 years.
"Anywhere where you've had an exceptionally strong housing market, you're going to see strong broker growth," said Joe DeFur, executive vice president and regional managing director at Wells Fargo & Co.
Of the 25 largest firms that employ stockbrokers in Los Angeles County, two firms saw the biggest hiring increases. Wells Fargo, based in San Francisco, added nearly 200 brokers in Los Angeles, part of its "one-stop shop" model of selling its customers everything from checking accounts to estate planning. Wells Fargo recently opened a branch on Montana Avenue in Brentwood, where it placed licensed brokers to help meet what it calls the "complex financial needs" of customers.
But another trend has emerged in which veteran brokers are opting to work for independent agencies that offer more freedom, fewer restrictions on the products they sell and higher payouts.
Western International Securities Inc., an independent brokerage firm in Pasadena, has been the biggest beneficiary of that trend, adding 22 brokers last year. Many of them came from old-line wire houses like Merrill Lynch and Morgan Stanley.
"We have no proprietary products, so there's no motivation for the rep to try to sell anything other than what a client needs," said Donald Bizub, Western International's chief executive.
Mike Hefner, a financial advisor at Hefner Group, part of Western International, said the brokerage industry has changed dramatically in the past decade.
"It's still a meat-and-potatoes business," said Hefner, whose father has been a stockbroker for 52 years and worked at the former Bateman Eichler Hill Richards. "Many firms are moving away from commission-based sales and now want everyone in a managed account that generates fees."
Banks and brokerage firms have been tinkering with their pay structures, mostly by promoting fee-based programs that charge based on the assets a customer keeps at a firm.
Many firms will only keep brokers who are collecting at least $500,000 or more in revenue, though some payouts to brokers have fallen to 25 percent, down from 40 percent.
Many in the industry refuse to disclose how their stockbrokers are paid because it varies from one broker to another.
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