Brokers' pay rose last year - but not at banks, a consultant says. The typical bank brokers' pay fell.
Compensation in the brokerage community at large moved up 6%, to $123,839 a head, the Securities Industry Association said Tuesday. But the average bank broker took a 10.4% pay cut, to $63,490, said Kenneth Kehrer, a bank consultant in Princeton, N.J.
"Bank brokerages need to become more self-sufficient and rely less on referrals," Mr. Kehrer said.
Last year was the second in a row that investment representatives at banks saw their pay drop, after earning a record $80,500 on average in 1993.
Mr. Kehrer said bank brokers - who rely heavily on commissions - were less productive in 1995 than in 1994. That's partly because of a falloff in referrals from other bank employees, who last year focused more on making loans and attracting deposits than on selling investment products.
Indeed, bank brokers averaged 221 referrals from branch staff in 1995, down 43% from 393 in 1994 and from more than 400 in 1993, Mr. Kehrer said. Brokers at banks averaged $169,704 in total sales in 1995, a 3.1% drop from 1994.
"Bank brokers got soft, and they found it harder to knock on doors," Mr. Kehrer said.
Other factors are making working conditions tough at bank brokerages, such as disruptions caused by mergers and acquisitions, and a base salary lower than the industry average, he said.
Bank brokers say this year may prove better. The first six months saw record inflows into mutual funds, and bankers have said their sales have increased month after month.
"We're getting our act together," said James Overholt, president of the brokerage subsidiary of Great Western Financial Corp. in Chatsworth, Calif.
Since Mr. Overholt joined the company in February, the unit has seen gross sales jump 2.5 times from "very low" volume in 1995, he said. He attributed the growth to conditioning tellers and other branch staff to refer customers to the company's investment representatives.
"We are, for the first time, really building bridges with our retail association," he said.
Meanwhile, First Union Corp. in Charlotte, N.C., bucked the industry trend by paying its brokers 58% more in 1995 than it did in 1994, said Dwight Moody, president of the bank's brokerage. The company hires seasoned brokers, he said, and is working to boost referrals and drum up business by sending brokers into the community.