Alex Freemon was so eager to be a stockbroker after graduating from the Georgia Institute of Technology last year that he said he was happy to go door to door selling mutual funds for Edward Jones & Co.
The brokerage flew him to St. Louis, where he practiced knocking on a model door in a classroom of would-be brokers at the company’s headquarters, then sent him back to Atlanta to walk the streets for 10 hours a day for about $30,000 a year plus commissions. Freemon said he quit in March after realizing he would have to spend five years struggling to meet sales goals before he could focus on helping clients make financial plans.
“Until you actually go out and hit the pavement, it doesn’t really sink in,” said Freemon, 23, who now works as a business analyst at a software company in Atlanta. “It’s not impossible, but it’s definitely not sustainable if you have a family or anything to do besides knocking on doors.”
Breaking into the brokerage business is getting tougher as declining fees make small accounts less profitable and government restrictions on unsolicited calls make phone sales taboo. That’s leaving big firms struggling to replace a retiring generation of advisers who helped accumulate trillions of dollars of assets and generated steady profits for years.
“The only way you can do it is if your dad is rich and he’s got country-club buddies he can send you or you’re a psycho who can work 20 hours a day,” said Josh Brown, who helps oversee about $350 million at Fusion Analytics Investment Partners LLC in New York.
Earning Commissions
Stockbrokers have for decades helped manage Americans’ money, earning commissions when they sold securities, mutual funds and other products to individual investors. The biggest brokerages -- Merrill Lynch, Morgan Stanley, Wells Fargo & Co. and UBS AG -- have seen their market share drop to 42 percent from 49 percent in 2007 amid competition from discount brokers and independent advisers, according to Sean Daly, an analyst at Boston-based research firm Cerulli Associates.
The shift to discount brokerages is happening as individual investors return to the stock market. Charles Schwab Corp.’s client assets rose 14 percent in the first quarter, as the Standard & Poor’s 500 Index headed toward a record 1633.77 yesterday. That’s more than twice the 6 percent increase for Bank of America Corp.’s wealth-management unit.
Brokers also are leaving the biggest firms to join or start smaller money-management businesses, known as registered investment advisers, that don’t take commissions. From 2009 to 2012, the ranks of investment advisers increased 7 percent while the number of brokers fell 9 percent, according Aite Group LLC, a financial-research company based in Boston.
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