Among the most trusted in U.S.: brokers

Investing

November 18, 1996|By BILL ATKINSON

BROKERS MIGHT not have a chance beating members of the clergy in a "who Americans trust most" contest, but these days they'd come awfully close.

Ninety-four percent of investors with brokerage accounts say they are "satisfied" with the service they receive from their brokers, a survey by the Securities Industry Association shows. What's more, nine of every 10 investors say their broker does an "excellent" or a "good" job at being friendly and helpful, providing easy access to account information and returning calls promptly.

And 83 percent of investors who rely on professional investment advice say the advice they've received has "significantly" or "somewhat" improved their investment performance.

What gives?

The answers are simple. The industry has taken steps to clean up problems, and stocks are going gangbusters so investors are happy. The Dow Jones industrial average is up 24 percent since the beginning of the year, and 65 percent since 1994.

Marc Lackritz, president of the SIA, the trade group that represents more than 760 securities firms throughout North America and hired the independent research firm of Yankelovich Partners Inc. to do the study, said there are three explanations for the results.

"One is our firms and our brokers are doing a better job serving their clients' needs. Secondly, a rising market makes everybody feel better. Third, the numbers are just the numbers," Lackritz said.

But what surprised even SIA officials is the answer investors gave when they were asked whether they thought that the market's performance had an impact on their views toward brokers and the industry. Eight-four percent said "no."

"I'll have to see that to believe that," said A. B. "Buzzy" Krongard, immediate past chairman of the SIA and chairman and chief executive of Alex. Brown Inc., a Baltimore-based brokerage and investment banking firm. "I hope I don't get a chance to find out if that is true or not."

Yankelovich interviewed 1,500 investors nationwide who were 18 years or older, had total household income of $50,000 or more and total investable assets -- excluding their home -- of $100,000. Of the group, 798 said they have an account with a brokerage firm.

There was other good news for the industry.

Seventy-one percent of the investors said the services provided by their brokerage firms were a good value for the money, compared with 63 percent a year ago. Fifty-five percent of investors held a favorable opinion of the securities industry, 21 percent an unfavorable and 24 percent were unsure.

But investors' feelings toward the securities industry as a whole didn't match the popularity of individual brokers. While 94 percent of investors were satisfied with their brokers, 63 percent had a favorable view of the industry, 19 percent an unfavorable and 18 percent were not sure.

The SIA wasn't surprised, saying people tend to give their congressman higher marks than Congress, and their doctor higher marks than the medical profession.

"There is no way of getting around that," Krongard said.

The perception that brokers are greedy still dogs the industry, though that view is declining. About two-thirds of investors, or 67 percent, said brokers are more concerned with their own commissions than with their clients' best interests.

But the data show the industry's image is brightening. Among the results:

* Industry motivated by greed. Fifty percent of the investors said it is a big problem, compared with 54 percent in the 1995 survey.

* Brokers or firms putting their own interests ahead of investors' interests. Forty-seven percent responded that they regard it as a serious problem, compared with 51 percent last year.

* Insider trading. Thirty-eight percent said it was a big problem compared with 42 percent in 1995.

* Transaction fees and commissions that are too high. Thirty-two percent said it was a big problem, compared with 35 percent from a year ago.

"They [the numbers] are all headed in the right direction," Krongard said. "The professionals at Yankelovich say every industry in America would kill to have results like that."

Pub Date: 11/18/96

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