The Death of Cold Calling

If you thought daytraders were struggling, you should see the carnage and upheaval in the cold-calling retail brokerage biz, which ought not to exist at all given its parasitic nature.

I have a quote in this monster article by Zeke Faux at Bloomberg about how the way brokerage firms built up their businesses in the 70’s, 80’s and 90’s is no longer working.

There are many reasons for this, from smarter investors to aging Boomers to Caller ID to the new generation’s preference for email. If you can’t get someone on the phone, you certainly can’t push them into an investment they don’t need. This gets to the heart of why big firms are starting to train kids in their call centers, not just in the old Hunger Games training programs. It also explains why the boiler rooms are disappearing one by one.

Here’s me:

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.

I’ve written the definitive story of the art of cold calling and how the brokerages used it to raise money since the 1960’s in my book Backstage Wall Street . I’m pleased to be here chronicling its death in real-time as well.

Don’t miss this story.

Source:

Brokers Go Gray as Youth Unsustainable Without Cold Calls (Bloomberg)

Read Also:

Wall Street Eats Its Young (TRB)

Backstage Wall Street