Brokerage adapts to net competition

BOULDER — If you’ve seen the online trading company commercials, you’d think unemployment offices are full of investment brokers made obsolete by the Internet. Not quite. But the industry has had to adapt to the competition.

“Clients are more informed than ever because of the Internet,´ said Robert Taylor, vice president and branch manager of Salomon Smith Barney in Boulder and Interlocken. They now can get the information easily on the Internet that brokerage firms used to provide, and, as we all know, anyone can trade online without a broker.

As a result, Taylor said, “We’ve had to adapt. The buy/sell business is over. Most brokerage firms have become consultative and gone away from transaction services.” The main role of brokerage firms now, he said, is to provide the “advice of professionals” and help clients use the information they have.

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Tom Mahoney, vice president of investments at A.G. Edwards & Sons Inc. in Boulder, agreed with this assessment. “We’re still evolving in that direction,” he said.

Proof of that evolution may be the “boutique setting” developed at the Boulder offices of Salomon Smith Barney, which Taylor said “takes the consulting aspect a step further.” The boutique setting, Taylor explained, is an attempt on the part of brokerages to be more service-oriented. Instead of the applying the strategy typically used by many brokerage firms, the boutique setting involves a smaller group of brokers taking much more of a team approach.

He likened this strategy to a law firm, where lawyers may all be experts in certain areas of law and meet to discuss each other’s cases. With the boutique approach, there is a one-on-one client/broker relationship, but, because the brokers – all experts in different areas of finance – take a team approach to solving clients’ problems, “clients receive indirect input from nine seasoned brokers,” Taylor said.

“Sharing ideas in more of a team approach is why we feel the boutique approach is very unique,” said Taylor, whose Boulder team will be growing from five to nine brokers and is in the process of negotiating a move to a bigger office in downtown Boulder.

After hearing Taylor’s explanation of the boutique strategy, Mahoney said it didn’t sound like an exceptionally new idea, but added that when that type of approach “works, it’s a great idea.”

Stuart Olsen, branch manager of the Charles Schwab Boulder office, was more cautious in commenting on the system because he wasn’t totally familiar with it. But based on his own experiences, he did say the approach isn’t unique in the industry. “Every firm has something like that,” Olsen said. Charles Schwab, like most established firms, has a broad network of experts that brokers can consult for advice.

And so does Salomon Smith Barney. The difference, Taylor said, is that the Boulder offices also have in-house experts in fields such as estate and trust services and retirement planning who work together.

While the Boulder office has the option of consulting the company’s experts, Taylor said their “mission is to do that consultant work in the Boulder branch.” As a result, they’re more responsive to clients’ needs and problems, the process is more personal and they have a quicker turnaround.

Along with a small group of experts comes a very serious approach to operating the branch. While we’re all familiar with “Stuart,” the Gen-X, tattooed, multi-pierced slacker who introduces his boss to online trading in ads for e*trade, that image is the antithesis of what Taylor’s branch is portraying.

“Clients are dealt with in a very professional manner,” Taylor said. For instance, there are no casual days at the office. “We’re appealing to a client that likes and expects that,” he said. “We take managing their money very seriously.”

While the Boulder office of Salomon Smith Barney may be approaching business a little differently, Taylor was quick to point out that it’s nothing radical. “We’re not trying to re-invent the wheel of how business gets done.”