Hard times fuel demand for brokers services

Charlie Bouchard, A.G. Edwards branch manager in Loveland, uses the weather as an analogy to describe the historic rise and fall of the economy over the past five years.

“We had the perfect storm from 1997 to 2000 to create one of the best bull markets in history,´ said Bouchard, an A.G. Edwards associate vice president. “We had a 10-year run in the market, the longest economic expansion in history, coupled with relative peace in the world.”

That and other favorable conditions — including the rapid expansion of Internet capabilities and technology during the period — fueled a speculative bubble of historic proportions.

In the end, that perfect storm rained grizzlies, resulting in the worst bear market in 70 years. The rains may have brought a much-needed timeout for the economy, but area stockbrokers say they haven’t been resting.

Regulatory changes that allow stockbrokers to offer a variety of investment products and services, along with growing consumer demand for those services, have helped Northern Colorado brokerages weather that perfect storm of recent years.

Advice needed more than ever

Investors stung when the bubble burst need advice and services more than ever, brokers note. Meanwhile, they say, declining stock prices spelled opportunity in the market.

Both factors have meant stockbrokers are staying busy despite the economy’s decline.

Bouchard said his industry went through some rocky times during 2001 and 2002. Those years separated the wheat from the chaff, he said.

“Just like difficult times in the real estate business or anything else, you see the number of people in the business shrink,” Bouchard said. But that can’t be tied directly to the state of the economy, he noted.

“It wasn’t just the economy but a number of things that really weighed heavily on people’s consciences,” Bouchard said. Terrorist attacks, employment concerns and corporate scandals eroded investor confidence.

Unlike those factors, Bouchard said the state of the economy in general doesn’t necessarily have a direct impact on stock transactions. “It is not a direct connect-the-dot relationship, where if the economy is bad, our business is bad,” he said.

“The one correlation that the economy has is that stock markets in general are all about earnings. In the short run, stock markets will trade to extremes on the downside and extremes on the upside, which we’ve seen both of in the last four years.”

Brokerages that are strictly transaction-oriented faced the heftiest challenges over recent years. “Business was down probably 50 percent or more” for the more transaction-oriented brokerages, Bouchard said.

His business, meanwhile, expanded. Over the last few years, Bouchard moved his office and took on more space. “I have more people working here today than I did in 2000 and 25 percent more space,” he said.

A.G. Edwards offers a full range of financial-planning services to customers. That means focusing on more than just a client’s stock-trading needs, Bouchard said.

“The reality is, our clients need us more than they ever did in a bull market. They need advice, and that’s what we sell, really.”

Need for services remains strong

Geoff Leopold, Broomfield-based stockbroker with Edward Jones and former regional leader for northeastern Colorado, said Edward Jones investment advisers in Northern Colorado have found the need for their services remains strong.

“We have not seen a negative impact in our business,” he said. “Our business has been down, but we still have been doing very well.”

Leopold said as a full-service investment firm, “we help investors remember the things that are important. Their need to put their kids through college, and their need to save for retirement doesn’t change whether the market is up, down or sideways.”

Leopold said Edward Jones investment advisers have focused on education to help investors negotiate challenging financial times.

“What we help educate our investors to understand is that when the stock market drops from peak to trough about 45 percent in value ? there are opportunities. You can get ownership in some of the best companies in the U.S. at prices we haven’t seen in years. This is a buying opportunity.”

Edward Jones investment representatives operate their individual offices independently, Leopold said. “The traditional way that our investment representatives build their businesses is by going out and meeting with individual investors and small-business owners at their locations, in their homes or businesses.”

That long-standing tradition has been successful — particularly as the economy dipped, Leopold said. Investors are looking for information, products and services.

“In the late ’90s, anyone could make money in that environment, and people felt they could do it themselves. When it turned, they didn’t know what to do.”

The economic downturn of recent years has brought other opportunities, Bouchard noted.

“I always believe there is no bad time to hire good people,” he said. “So I had an opportunity to hire what I think are some very good people during that time. The best opportunities are always going to present themselves in the adverse times, not good times.”

Bouchard echoed Leopold’s assessment that investors need solid advice more than ever, and that has been a boon to their industry.

“In the late ’90s, people thought making money was easy,” he said. “We end up with more referrals in bad times than in good times. People found out that they need more advice.”

on Facebook on LinkedIn