Last week's volatile stock market has made bank brokerage chiefs antsy, and several have acted to calm investors so they won't pull their money out of mutual funds and other investments.
Some brokerage executives are telling salespeople to make reassuring phone calls to nervous customers - and not to recommend risky stocks and aggressive stock funds.
"I think anyone with half a clue has been very edgy for many months now" about the stock market, said Edward Diamond, president of the brokerage at Dime Savings Bank of New York.
Some brokerage chiefs complained that the market had started to look shaky just as they were racking up record sales.
Mutual fund investors continued to pour money into stock portfolios in March, particularly last-minute deposits into tax-deferred retirement plans, according to the Investment Company Institute.
The Washington trade group for mutual fund companies estimated that net cash flow into stock funds was $21 billion last month, down from $21.9 billion in February but the third-largest inflow ever.
Responding to recent market swings, Dime's Mr. Diamond has begun confining his brokers' stock selections to blue chips like Wal-Mart Stores and J.P. Morgan & Co. Dime is sticking with its bread-and-butter mutual funds, which invest in growth and income stocks.
For investors seeking more aggressive funds, Mr. Diamond's sales force is recommending portfolios that invest in value stocks as opposed to growth stocks.
Value funds invest in companies with "undervalued" stock prices, which Mr. Diamond argues are less volatile in a slow-growth economy than growth funds.
He is recommending Oppenheimer's Quest for Value Fund and Franklin's Institutional MidCap Growth Fund.
PNC Bank Corp.'s brokerage responded to market turmoil in February with about 200,000 statement stuffers, reminding all brokerage customers that a market downturn generally occurs every five years.
The mailing also told customers that last year's mutual fund returns of 20% to 30% were unusual. Customers should expect 10% to 15% returns in the near future, the mailing said.
The Pittsburgh-based bank company began an in-house seminar for its 230 brokers last month called "Prepare for the Bear."
Sales managers also remind brokers at monthly meetings to call their customers regularly and reiterate advice about the long-term nature of mutual fund investing.
"Our message to our brokers is: Don't try to second-guess the market, and don't get spooked by market changes," said Joel Calvo, president of PNC Securities Inc.
Some brokerage chiefs try to use downturns to their advantage. They tell their brokers to get on the phone to onetime mutual fund investors and encourage them to invest again.
"The public has pretty much been conditioned to buy on a pullback in the market," said Gerald Thomas, president of the brokerage unit at St. Paul Bancorp., Franklin Park, Ill.