The Impact Of The Elimination Of Jobs By Wall Street Firms
The New York Times recently had an article about more Wall Street firms continuing to axe employees. Citigroup announces that it will eliminate some 1% of its workforce, or around 3,000 jobs. BNP Paribas says it will slash 1,400 jobs, or some 7% of its workforce. Goldman Sachs is reportedly going to lay off 3% of its employees, or around 1,000 jobs. Bank of America has cut some 3,500 jobs already, with more on the horizon that could skyrocket the number of layoffs to 30,000 or so. The job elimination frenzy on Wall Street continues, with projections of losing another 10,000 or so jobs next year on top of the 22,000 lost since January 2008.
Amid fears of defaulting Western nations, a weak economy at home, high unemployment, volatile markets and uncertainty among investors, Wall Street is under pressure to turn a profit. A Barclays Capital analyst, Roger Freeman, said "we struggle to find any broker-dealer businesses reporting positively trending results." In this time of cost cutting, firms target their lower producing financial representatives and advisors because on Wall Street the name of the game is to bring in assets and to generate income for the firm. These days this is accomplished by gathering assets and charging a management fee based upon the amount of the account or selling complex investment products that are most profitable for the firm. Regardless, the brokers who are the top producers for the firm are safe. They are proven salespersons. They know how to get the assets in and this turns into money for the firm. They are the elite of the elite, the recipients of the "Top Producer Award", "The Golden Spoke Award", The Circle of Excellence", The President's Club Award" or "The Chairman's Club Award", all honors given to those who bring in the most money to the firm. Earlier in the year, Morgan Stanley foreshadowed the events to come on Wall Street when it fired several hundred financial advisors and then reported that further job cuts would be forthcoming for the "less productive" personnel.
Unfortunately, many of the "less productive" financial advisors that are being axed by big Wall Street firms are good people who spent more time getting to know their customers, figuring out what their investment objectives were and determining what level of risk they could tolerate before making recommendations about how to invest their money, rather than bringing in assets. They are those who were more than conduits through which massive amounts of assets were gathered for the firm. They are those who accepted their responsibilities, took them seriously and put their customers' interest ahead of the firms'. Unfortunately, on Wall Street it's all about who can bring in the most money.