Secrets of the Best Brokers

“Markets can remain irrational longer than you can remain solvent”      John Maynard Keynes


The single most important quality for being a successful broker isn’t the ability to talk a lot. Nor is it vast knowledge of finance. And it isn’t knowing which restaurants or shows to take clients to. The single most important quality in a good broker is the ability to listen.

Clients are bombarded by information and stimuli all day long. They are glued to their screens during the day and to their Blackberries when they go home at night. If markets are moving they may be up in the middle of the night as well.

Many of the clients I speak to get over 500 emails a day. They can’t read all of them. Their phones constantly ring so they put them on voicemail or mute. It is easy to see what they don’t have a lot of is time (or patience, for that matter!).  When speaking to a client you must never waste their time. This does not mean speaking really fast, either!


The Cardinal Sin

The cardinal sin I see most brokers make – even those who should know better – is to ring up a PM (portfolio manager) and say something along the lines of,

Today, we have an update on Wing Ding Textiles. They reported good Q2 earnings and the analyst still likes the stock because…”

Stop! Do you KNOW the client is interested in Wing Ding? Does he care about the company at all or is he busy trying to figure out why China Construction Bank just fell 3%? You are now wasting his valuable time. Shut up! Listen!

The Main Job

As a broker our main job is to help clients solve their problems. That is it. Full stop. We like to think we are important and indispensable. But we are not. There are many other firms out there with many other brokers calling the same client every day. How do you set yourself apart – and above – the others? You listen. Get the client to talk and find out what is bothering them, what are they working on today? They don’t give a rat’s ass what YOU want to talk about. Managing $10 bn dollars in three separate funds across six different markets, the PM has a lot on his mind and he doesn’t have the time to listen to what YOU want to talk about.

Yes, you went to the morning meeting. Yes, you have the daily “pack” in front of you and you want to make sure the client sees all the firm’s product. Yes, you want to sound good by showing him how prepared you are and how much you know. Please let me say it again: he doesn’t give a rat’s ass.


But aren’t I supposed to promote the research?

Yes, always but at the right time. How many times would you go to a restaurant that served you fish (because they have a lot of it) when you ordered steak? How many times would you fly on an airline that took you to Dallas because they needed the airplane there when you wanted to go to Chicago? It’s the same damn thing. You must give the clients what they not what you want. Listen first. Talk second.


How do I know what the client is interested in?

Good question. If you approach your clients always with this question foremost in mind you will have already set yourself apart from the tawdry competition. You ASK.


Here is one way it works well:

Broker:           Morning, Dave. Derek at UBS here. How’s it going today?

Client:             Hey Derek. I’m pretty busy right now.

Broker:           Do you want me to call back later?

Client:             Yeah. How about in an hour or so? I just got to get this report done.

Broker:           You bet. No worries. I’ll call you in an hour.

And make sure you do just that.


Another good example:

Broker:           Morning, Dave. Derek at UBS here. How are you doing today?

Client:             Markets suck but other than that it’s OK. What’s up?

Broker:           I wanted to give you a call and see if you are looking at the Chinese internet space at all?

Client:             Yeah, I’m actually working on Baidu right now. What do you guys think?

Broker:           We still like the stock, in fact, the analyst just raised his target price….


Please don’t be like most of the street and do this:

Broker:           Morning, Dave.  Dick Handler here. We got a great note out on Baidu. The analyst has upgraded his target price to $165.75. No, wait a minute that was the old target. Yeah, here it is, the new target price is $167.03. He did this because he thinks that…

Client:             Dick, I am kind of working on something else here.

Broker:           Yeah? Uh, OK. Well, we still like Baidu and think you should buy it here.

Clown shoes. Don’t do it.

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