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Dec. 09, 2003

Brokers Rate Brokerages in PRIMEDIA's Registered Rep. Magazine 2004 Broker Report Cards
Edward Jones Takes Top Honors Two Years Running; UBS Rounds Out Bottom of the List
posted by Wire Reports

NEW YORK, Dec. 9 /PRNewswire/ -- What do stock brokers really think about their firms? PRIMEDIA's Registered Rep. magazine, the source of information for investment professionals, announced today the publication of its 13th annual 2004 Broker Report Cards in which brokers at seven leading US firms offer candid opinions on their own brokerages.

Except for two notable exceptions, most brokers polled think their firms are somewhat stingy and ethically challenged. It's true that reps at the larger firms were pleased that their public images had bounced back from the lows brought on by the conflict-of-interest research scandals of a year ago. And many polled thought their firms had successfully brought ethics to the forefront. But, besides A.G. Edwards and Edward Jones, whose broker employees ranked themselves as nearly perfectly honest, the other firms had given themselves imperfect ethical scores. (It should be noted that advisors from all but Edward Jones thought their public images were poor, despite a bounce-back from last year's poll.)

Perhaps as a result of the conflict-of-interest scandals, most reps polled felt they had less pressure to sell certain investment products over others. The advisors polled thought their firm's research and products have improved.

Now the bad news. Reps, whose incomes had been under pressure from the three-year bear market, groused about the cut backs that their brokerages had implemented to boost corporate profit. This resulted in what they described as lack of administrative support, particularly in sales assistant support.

Proving Wall Street is no match for Main Street, St. Louis-based Edward Jones edged out the competition yet again to land top honors with an impressive average of 8.99 in employee satisfaction (out of a possible 10). It received the highest ranking in 15 of 19 categories. Only two firms -- St. Louis-based A.G. Edwards (from 8.21 to 8.31) and Smith Barney (from 7.70 to 7.71) -- made improvements to climb higher in this year's ranks. Rounding out the bottom of the list at 7.21 was UBS, a firm plagued by lingering branding issues and the Report Cards lowest marks in public image.

Reps' complete rankings are detailed in the December issue of PRIMEDIA's Registered Rep. In order of overall rank:

* #1 -- Edward Jones: Still On Top -- Rank: 8.99. The pom-poms at this St. Louis-based firm can't be ignored as reps here had fewer complaints and more praise than any other firm polled. The firm was singled out for its strong ethics, unvarying approach to business and overall support of its reps. Far from the pressures of Wall Street, there is a real appreciation among Jones reps for the sense of independence and sales support. Said one enthused employee, "it's like having your own franchise and not paying the upfront costs of running it."

* #2 -- A.G. Edwards: A Nice-Guy Firm Steps Into the Spotlight -- Rank: 8.31. Another St. Louis contender rises through the ranks. The line on A.G. Edwards is a familiar one: Sterling reviews on ethics, a low-pressure atmosphere that investors also applaud and happy financial advisors -- but a public-awareness rating down there with that of the backup catcher for the Tampa Bay Devil Rays. As one rep states, "Those who know us, love us. But not enough people know us." Management is aiming to fix the "quiet problem" with the launch of its first-ever national ad campaign.

* #3 -- Smith Barney: A Steady Recovery -- Rank: 7.71. The hiring of Sallie Krawcheck as CEO and the firm's focus on wealth management seems to have put most reps in good spirits about the company's forward direction. Although reps say the Grubman affair still haunts them, they tended to see research and image problems receding.

* #4 -- Merrill Lynch: Belt-Tightening Works -- Rank: 7.54. Perhaps no firm has cut costs more successfully. And the price, say reps, is a blow to their effectiveness. Chief complaint included Merrill's attempt to be "all things to all people" and management at the local level. High marks in ethics and quality show that even in the face of scandals, Merrill remains one of the most respected names in the business.

* #5 -- Wachovia: A Firm in Flux -- Rank: 7.41. Of primary concern is whether Wachovia's addition of 3,000 brokers in a merger with Prudential Securities will result in a less personalized approach to firm management. While the survey showed many laud the firm's ethics and commitment to a regional focus, some wonder whether the desire to be larger will end up rendering it "just another wirehouse."

* #6 -- Morgan Stanley: Losing Ground -- Rank: 7.38. Praised for sidestepping the worst scandals of 2003, Morgan Stanley enjoyed the highest ranking among wirehouses in last year's Rep's survey. But this year, a few problems arose, including controversies about the firm's reliance on proprietary product sales. Additionally, its view on "ethics" collapsed and there is a poor outlook on "hiring and recruiting practices." Said one rep lamenting over massive job cuts, "I'm actually amazed they're hiring at all. The problem is that it's a revolving door around here."

* #7 -- UBS: Oh, the Paine of Re-Branding -- Rank: 7.21. A hundred years of brand identity is not easily replaced. That's the message from UBS brokers about the firm's re-branding effort now that it has completed its digestion of the former (household-name) PaineWebber. According to one rep surveyed, "It doesn't matter how great we are, no one knows us. They know Paine Webber."

"Interestingly, given the mutual fund trading scandal, many brokers ranked their ethics fairly high, although not perfect," said David Geracioti, editor of Registered Rep. "Brokers gave their firms rankings a minimum of eight out of ten on the issue. But on a public image basis, they scored their firms quite low. Until brokers score their firms 10 out of 10 on ethics, Wall Street has some work to do."

Rankings are based on a poll of 350 brokers at seven firms during September and October, 2003. All those surveyed had -- at minimum -- one year of production at their respective firms and were asked to rank their employers in 20 categories, based on a 1-10 scale, with 10 representing the best. The brokers were drawn from a random sample of the subscriber list of this magazine.



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