By Philip I. Rosenbaum
AP Businss Writer
NEW YORK (AP ) – Jeffrey Dudas began a stockbroker training program with Prudential-Bache Securities Inc. on Oct. 19, 1987, the day infamously recalled as Black Monday, when the Dow Jones industrial average plummeted 508 points.
What’s worse, Dudas began practicing his new profession on Nov. 13, a Friday.
Foreboding signs and the hard reality of the crash aside, Dudas, like some of the brokers who have made their debuts within the last year, has used the crash to his advantage.
Dudas, 29, a former Navy pilot, said prospective clients were initially hesitant to commit to a new broker in the wake of the crash, but were anxious to talk.
“I have people who have had brokers for years and are dealing with me and one of the things they know is … that their brokers didn’t call them Oct. 19 or the weeks following,” said Dudas, who works at Prudential-Bache’s office in Virginia Beach, Va.
A number of those brokers, even some who did call their clients on the day of the crash, might now be unemployed or in another line of work. Over 12,000 workers in the securities business – including brokers, floor traders, clerks and secretaries – lost jobs as a result of the crash of a year ago, according to some estimates.
A survey by the North American Securities Administrators Administration, a state regulatory agency, shows approximately two out of three investors say their problems stemming from the crash have not been resolved. John Baldwin, NASAA’s president, said the survey indicated one out of seven small investors said they have left the market completely or were holding less than $$500 in stocks.
Once known for their ability to grab new customers with a daily round of cold calls, young brokers joining the fold since the crash seem to be working harder than ever at getting to know their clients.
Jim Chin, a broker for Shearson Lehman-Hutton in New York since late 1987, said good brokering is not purely transactional.
“You’re not just calling a person and saying, ‘Look, I have this great stock. You ought to buy it,’ and you don’t know anything about the person.”
Chin, 42, meets with his clients a few times before deciding where to distribute their investments.
Recently, a client asked Chin to invest his $$1 million portfolio in equities. Realizing his expertise at that point was limited, Chin gave part of the responsibility and commission to other Shearson money managers whose performance he monitors.
“It’s not a matter of maxing out commissions, but doing the right thing for the client,” Chin said.
Abbe Spector, a 25-year-old financial consultant for Merrill Lynch & Co. Inc. in New York, compares the role of the post-crash broker to that of a physician.
“You can’t just walk into a doctor’s office and be prescribed a medicine,” Spector said. “You have to get to know the history and then start making recommendations.”
Partly in response to the bottom falling out last year, Spector made the transition from municipal bond seller to full-service broker.
During the bull market people were eager to hear a stock idea right off the bat, Spector said. But since the crash, “people adjusted their thinking and want to talk about our overall ideas,” she said.
Merrill Lynch has taken the consultative approach for years, according to Spector, but now the clients have come to expect it.
When Spector is convinced that a person she has cold-called is already under good financial care by another broker, she usually does not try to pursue the business.
But many new brokers find that success is still based on a numbers game. Shearson’s Chin works a 55-hour week and recently broke the 200 mark in his clientele.
New brokers are required to attain 40 new clients with investments of at least $$10,000 each in their first six months, according to Chin. “I blew it away,” Chin said of the minimum.
The company sounds just as ambitious about the future of the brokering business. Spokesman Michael O’Neill said Shearson enrolled 900 in its training program for 1988, up slightly from 853 in 1987.
“We have a long-term commitment to retail investors, even though individual investment is down this year,” he said.
For Prudential-Bache’s Dudas, the challenge lies in holding on to new business.
Nothing can compete with landing aboard a jet carrier at night, the ex-aviator said reflectively, but “I’ve lost more sleep for my clients than I ever did after I came back from a bad landing in the Navy.”
PHILIP ROSENBAUM 