BOCA RATON, Fla. Change was the agenda at last weeks annual meeting of the Securities Industry Association, but aside from an atmosphere of uncertainty surrounding the presidential election, many of the conferences themes sounded quite familiar.
Not surprisingly, executives from many of the largest U.S. securities firms said they believed consolidation of brokerages, banks, and insurance companies would continue to dominate headlines, driven by the need to expand product capabilities and build capital.
Clearly the trend is for further consolidation and the joining of securities, banking, and insurance functions, and this trend is accelerating, said E. Stanley ONeal, executive vice president of Merrill Lynch & Co. and president of its U.S. private-client business, in a speech Friday. We are moving into the final stages of consolidation here in the U.S.
Firms like Merrill are grappling with how to compete simultaneously with low-cost online brokerage services and high-touch private banks. This year has seen several mergers aimed at combining the two capabilities, including the deal between U.S. Trust Co., an old-line New York private bank, and Charles Schwab & Co., the San Francisco online brokerage.
Merrill and a host of other traditional Wall Street firms are also grappling with how to build their balance sheets quickly enough to keep pace with the growing demands of corporate finance. This goal has been behind some of the years other mergers, including the pending combination of J.P. Morgan & Co. and Chase Manhattan Corp.
Mr. ONeal said Merrill is shifting its focus toward financial consulting, aggressively courting the high-net-worth end of the private-client market. We do not even consider ourselves to be in the retail securities business anymore, Mr. ONeal said. Were in the wealth management business.
Merrill is devoting more resources to its corps of brokers, lengthening their training from two years to four or five. It is encouraging the development of client teams and providing more materials such as research to attract client dollars.
James Dimon, no stranger to change as the new chairman and chief executive officer of Chicago-based Bank One Corp., talked about the importance of management to performance. Id rather have first-rate execution and second-rate strategy, he said in his presentation Friday on how to face challenge.
Management was the first thing Mr. Dimon tackled when he arrived at Bank One in April, sweeping out executives left over after the resignation last year of John B. McCoy and replacing them with executives he knew from his days on Wall Street.
Mr. Dimon said a good management team would be entrepreneurial in spirit, treat everyone as partners, eliminate bureaucracy, and encourage open communication. He acknowledged that the immediate problems facing Bank One which is the fourth-largest U.S. banking company but has stumbled badly since last year go beyond who is running it.
We have to get it performing better, Mr. Dimon said. If we dont get it performing better, well fail.
Mr. Dimon said that a deterioration in credit quality, evidenced by rising nonperforming assets in the banking industry, is his primary concern these days and the Internets threat to make the traditional payments system obsolete is No. 2. The difficulty of finding talent in an increasingly shallow pool of available, qualified executives ranked third among his concerns. Theres a reason why Im here, by the way, he concluded, impishly.
In the hallway immediately afterward, Mr. Dimon laughed off questions about the notion that his trip to Florida was a recruiting mission, saying he had just been kidding.