让经纪人忙碌起来

By Peter Lynch

What rarely happens at the gas station happens all the time at the broker's office. Millions of customers pay the full-service rate without getting the full services. In a nation of smart shoppers, this may be the last great lapse. With all the attention going to discount brokers and Wall Street firms vying to offer the lowest commissions, nobody is talking about how people whopay for full-service brokerage can get their money's worth. Thanks to the computer, full-service brokers are a far more valuable resource than they were a few years ago. They spend most of their working hours staring at the same information the fund managers on Wall Street are staring at. With the newfangled terminals that have replaced the clunky Quotrons of old, even a broker in the boonies is only a keystroke away from a menu of high-powered sources including Reuters; Dow Jones New/Retrieval; Bloomberg, which reports on the vital signs (cash flow, revenues, etc.)of thousands of companies; Zacks, which gathers earnings estimates from all the analysts who follow a particular company; and charts and graphs that track stock prices and volume of trading goingback weeks or even years.

Along with these data services, the broker can call up the latest

commentary from the in-house analysts at his own brokerage firm.This is the sort of fresh information retail investors normally can’t get. To find out what the Dean Witter analyst is saying about IBM, the clients of Dean Witter have had to wait for the written report, which often takes weeks to be printed and sentout to the local branches. By that time, the information is stale and the fund managers and other large investors have already acted on it, because they hear it straight from the analyst’s mouth.

I've argued over and over that the retail investor has an edge over the wholesale investor in many aspects of investing, but getting the latest news from official Wall Street sources isn'tone of them. Look what happens, though, if the retail investor’s broker is willing to pass along the analyst's comments as they appear on his computer screen. The information gap closes, and the retail investor no longer has to be the last to know.

"The research departments of the major brokerage firms are underutilized, “says Tom Reilly, a Merrill Lynch broker from Boston who enthusiastically plays the new role of conduit between his clients and his database.Merrill Lynch has about 200 analysts in 37 countries, and when everone of them writes a report on a company whose stock is owned by a client of his, Reilly can retrieve it. "When I came into this business 18 years ago," he says, "the printed reports we mailed out could be three months old by the time they reached the customer. Now I can print a copy off the screen and fax it. Or if there's something that the compliance department won ‘tallow me to print, I can at least read it to the customer off the screen."

Suddenly, there are better things to ask a broker than "Where’s IBM trading today?" - which tells you nothing about IBM's prospects- or "Is the market headed up or down?" - the question brokers have to answer every day, even thought they have no more idea of where the market's going than you or I do.

You can ask forthe latest news on IBM from the Dow Jones wire, or for the latestsummary of earnings estimates from all the brokerage analystson First Call, or for a copy of the most recent bulletin putout by the in-house IBM analyst.

Or, if you want the complete story all at once, the broker canpull the relevant details out of Bloomberg, Zacks, and the rest,and string the pages together to produce what amounts to a homemadereport on any company that piques your interest. Al Bernazani,a broker at Smith Barney with 35 years of experience, preparesthese information packages as a matter of routing. "I can generate20 pages of data on almost anything," he says, "and the computersprint it up at night."

It sounds like a lot of extra bother, but Bernazani, Reilly,and other brokers who are the pioneers of computerized servicessay it's not. They can gather 20 pages on the computer withoutleaving their swivel chairs, and in less time than it would taketo walk to the office library and copy a couple of pages outof the S&P; reports or the "VALUE LINE INVESTMENT SURVEY," whichis the traditional way of doing research for clients. That oldmethod doesn't compare with what's possible today.

Perhaps you're looking for companies with particular characteristics-- a low price-to-earnings ratio, or no long-term debt, or ahigh growth rate, or an unbroken record of raising the dividend,or all of the above. Ten years ago, there would have been noeasy way to search through 10,000 publicly traded companies tofind the suspects that fit the description, but now we've gotonline databases with screens. Some of these databases are soexpensive it wouldn't make sense for the average person to acquirethem, but the brokerage houses might. In that case, your brokercan run the screens for you.

It's not a commonplace request at the moment, but Tom Reillyalready runs screens for his clients, and there's no reason stockscreen can't become one of the standard full services. Meanwhile,useful information on annuities, foreign stocks, and mutual fundsof all stripes is piling up on broker's desks. Many offices alreadysubscribe to the Morningstar and Lipper publications that trackthousands of mutual funds: stock funds, bond funds, open-end,closed-end, foreign, domestic, best total return over ten years,highest yield, you name it. A broker can help clients pick mutualfunds by sending along the ratings and the rankings, yet fewinvestors take advantage of this. People who believe that allfunds seem the same might feel differently if they looked atthese reports from time to time.

It won't be long before a broker's entire client base can beput on an alert system, where any newsworthy development thataffects a specific stock or mutual fund will trigger a note tothe broker, who can then relay the information to clients whoown the shares. There are a least two programs that do this already:Reuters Money Network and Telescan. Both roam the news wiresautomatically, looking for news on the stocks in a subscriber'sportfolio whenever that subscriber logs on to get the latestprice quotes for the shares.

Computers have revolutionized the business to the point thatthe two most important factors to consider in choosing a brokerare: (1) Does he have good software and good databases? and (2)Is he willing to use them on his clients' behalf? This is wherethe larger offices, particularly the flagship offices in majorcities, have an advantage over the smaller, far-flung branches.Larger offices tend to have greater access to research and moreelaborate databases than smaller offices do.

Bernazani is in a great spot. He works at one of Smith Barney'smain offices in Boston, which has its own trading desk wherebig blocks of stock are bought and sold for institutional clients.An office with a trading desk is likely to have the most advancedresearch available, which is how Bernazani gets to use Bridge.Bridge is a premier database that runs 24 hours a day there andwill tell you everything you ever wanted to know about a company'saffairs short of the CEO's bedtime. It also tracks options andcommodities and does the mumbo-jumbo calculations used by theesoteric market timers know as quantitative analysts, or quants.It's a great service, but for an individual to subscribe, thecost can run to a hefty $2,000 a month. Bernanzani makes useof Bridge for his customers free of charge.

I'm amazed that full-service brokerage firms aren't advertisingthe research benefits their clients can get from their computersystems, but so far they've been quiet on the subject. Assetallocation is what they talk about. That's where they hand youa questionnaire that asks you how much risk you are willing totake, and a worksheet so you can figure out how much money you'llneed for retirement, or to pay tuition bills, or whatever. Basedon your answers they design a portfolio with the right mix ofstocks and bonds for your particular situation. Then periodicallyThey review the portfolio to see if it's underweighted or overweightedin one investment or another. It's a valuable service, but notas valuable to the stock picker as the help the broker can providead hoc.

There's potential here for a total overhaul of the relationshipbetween brokers and clients, which often has been less than satisfyingto either party. Instead of the brokers calling their customerswhen they have something to sell, now they can call when theyhave something to say. The client will benefit from having anactive research partner who does for him what the analyst doesfor the big players on Wall Street. The broker will benefit fromfelling more useful. The brokerage house will be able to showthat higher commissions are worth the price.

We're in the experimental stages here, so the client has totake the first step. Call your broker and ask him what he andhis computer can do on behalf of the companies you own stockin. It might be the beginning of a beautiful new relationship.