BENJAMIN MARK COLE
Smith Barney Inc. has retained its position as the largest local stock brokerage the old-fashioned way by having the most brokers in L.A. County, with 586.
But despite the stock market’s heroic run over the last two years, some of the major brokerages posted only modest increases, or even decreases, in numbers of brokers.
Smith Barney is an example of that: On last year’s List, it tallied 578 local brokers, only eight fewer than on this year’s List.
Dean Witter Reynolds Inc., No. 3 on this year’s List, with 481 local brokers, has fewer than last year, when it had 521 brokers.
PaineWebber also fell, to 248 local brokers from 272 last year. With the decline, the brokerage also dropped from being the fifth-largest firm in the county to the No. 6 spot.
Merrill Lynch Fenner Pierce & Smith, No. 4 on this year’s List, fared better, with 456 brokers this year vs. 408 last year.
Why the growth at Merrill Lynch, but not at the other major firms?
“On a national basis, we are the No. 1 firm in most markets, so we are just building to our normal position here,” explained Rod Hagenbuch, vice president with Merrill Lynch in downtown Los Angeles. “We plan to keep growing.”
An anomaly on the List is No. 2-ranked Financial Network Investment Corp., a Torrance-based independent brokerage with 500 brokers.
Financial Network maintains 11 branches in Los Angeles, but each branch is owned independently by a branch manager, somewhat akin to a franchise operation.
The structure keeps the parent company’s costs very low Financial Network does not pay rent on the branches, said Miles Gordon, chief executive.
Gordon said he is not surpised by the fact that most majors are not growing. “It is very expensive, involves a lot of overhead, for the majors to hire on new staff, or add offices. And they are trying to push overhead down,” he said.
Among newcomers to the List is Beverly Hills-based Dabney/Resnick/Imperial LLC, which has 42 brokers, and snagged the No. 22 position. In 1996, Torrance-based Imperial Credit Industries effectively bought half of Dabney/Resnick; firm co-founder Neil Dabney left the firm shortly thereafter.
Another fast-grower is Century City-based Boston Group LP, now with 90 brokers, and in the No. 12 position.
Boston Group is the brokerage that took Studio City-based Jerry’s Famous Deli Inc. public, and has underwrittem other local companies.
Also new to the List is No. 5-ranked Prudential Securities Inc., listed with 287 brokers, and which is in the hiring mode, according to branch managers. Prudential almost surely qualified in previous years, but did not respond to survey questionaires.
No. 11-ranked Sutro & Co., which now has 100 brokers on board in Los Anegeles County, is now employee-owned, having split off from its former parent company, an insurance company.
Discount firms have not run the major brokerages out of the retail business, as some expected.
The largest discounter on the List is Beverly Hills-based Kennedy Cabot & Co., with 160 brokers, in the No. 7 position. The next discounter is all the way down in the No. 16 position, Charles Schwab & Co., with 74 brokers.