A growing concern among baby-boomers about retirement savings bodes well for Baltimore investment firms, according to officials of three major local securities companies.
Executives of Alex. Brown & Sons Inc., Legg Mason Inc. and T. Rowe Price Associates Inc. said yesterday they anticipate more business as people increase their savings and capitalism expands around the world.
But they also warned that the stock market is "pricey" and may be due for a correction.
"People are being very concerned about retirement," said James W. Brinkley, president of Legg Mason Wood Walker Inc., the brokerage arm of Legg Mason.
"We see that as a great opportunity."
He pointed to the increasing number of devoted savers, people to whom he referred fondly as "nerds."
"Finally the nerds are winning again," Brinkley said at a press briefing.
"I feel so comfortable with those fellas and girls."
The trend toward more savings has been beneficial to Legg Mason since the company specializes in the retail selling of stocks and the management of investments for its clients.
James S. Riepe, president of T. Rowe Price Investment Services Inc., a division of T. Rowe Price, said retirement money is extremely important to his company since half of its mutual funds assets are in retirement accounts.
"It's taken on a new importance to people," he said.
This "hunger" for retirement information is reflected in 250,000 requests for the company's retirement planning kit, which soon will be made into a computer program, Riepe said.
All three companies have profited from the recent bull market.
Alex. Brown recorded a 252 percent increase in its earnings during the first six months, hitting $24.8 million.
Mayo A. Shattuck 3rd, the new president of Alex. Brown & Sons, said the company developed its successful strategy during "doom and gloom" of last October when the Dow Jones industrial average was down to 2365 in the aftermath of the Iraqi invasion of Kuwait. At that time the company adopted a three-year plan that "allowed us to set goals that disciplined us," he said.
This strategy included trimming down the company's operation and refocusing some of its activities. The plan also called for beefing up Brown's services to help companies that are victims of the debt binge of the 1980s.
Brown, which specializes in handling the stock offerings of publicly traded companies, had planned on managing 15 offerings this year, Shattuck said. Instead, the company has done 46 such deals so far this year and could go as high as 80 by the end of the year, if the market holds up, Shattuck said.
But Brown is not depending solely on stock offerings to boost profits. It is offering a variety of other services to the companies that it takes public, Shattuck said.
All three executives agreed that the stock market is currently overpriced by most indicators. "The market is pricey," said Brinkley. "You shouldn't be astounded if you get a correction."
However, he doubts that any drop will be as substantial as the plunge of October 1987 or the selloff of October 1989. Brinkley said the market is not as overpriced as it was during previous highs and the market managers have learned to handle the fluctuations. He particularly pointed to the calm reaction of the market to the attempted coup in the Soviet Union.