BOCA RATON, FLA., NOV. 29 -- Palm trees and sunny skies cannot erase the somber mood that hangs over this year's meeting of the Securities Industry Association, which represents the nation's stock brokers.
With many firms losing money, market share and manpower, attendance at the SIA convention is the lowest in a decade. Late-night parties have dwindled and industry executives find themselves swapping stories on how to cut expenses and motivate brokers.
SIA figures show no letup in the business slide that has cost the industry -- on Wall Street and elsewhere -- some 50,000 jobs in the last three years. An estimated 35 percent of New York Stock Exchange member firms recently were reported to be unprofitable.
"None of the pistons of the industry are humming," said SIA research director Jeffrey M. Schaefer, talking about the virtual shutdown of junk bond activity and the sharp decline in merger and acquisition work.
At the same time, stock brokers at all levels were hurt by the plunge in stock prices that accompanied the slowing economy and the Iraqi invasion of Kuwait in August.
"It's as bad as I've seen it," said S. Buford Scott, a 32-year veteran of the securities business. Scott is chairman of Scott & Stringfellow Investment Corp., a 23-office regional brokerage firm based in Richmond.
Scott said his firm is using a variety of motivational techniques to encourage brokers to pick up the phone and call clients, even though they may get the cold shoulder. His brokers are often given specific investment ideas.
"We've got to give the brokers something useful to talk about," he said.
Once a week, Scott said, his brokers are invited to join a party-line telephone discussion in which they trade ideas on sales techniques.
Staying in touch with customers and trying to give them strong stock recommendations can backfire, however, said John W. Bachmann.
Bachmann's firm, Edward D. Jones & Co., has 1,600 one-person retail brokerage offices around the country.
The firm recently recommended Citicorp stock at between $23 and $18 a share, only to see it drop as low as $10. It is now about $12.
Bachmann, the firm's chairman, said, "We believed it was a good company then and we still do." But he acknowledged the episode was embarrassing to the firm and to his brokers.
Bachmann said his recommendation was that brokers call their clients "and candidly assess the situation."
One of the reasons so many brokerage firms have found themselves in financial trouble is that they get carried away during bull markets and expand too fast, said Hugh A. Johnson Jr., senior vice president at First Albany Corp., a regional firm in Albany, N.Y.
"You need to be optimistic to be in this business," Johnson said, "but it is that very optimism that almost brings you down."
The corridors of the lush Boca Raton Resort and Club, where the SIA has met for 17 years, are full of cost-cutting stories.
According to one such story, employees at a major Wall Street firm were told that if they used expensive private car services instead of taxis, they would have to pay one-third of the cost out of their own pockets.
The company's huge monthly bill for car services soon declined rapidly, the story went.
At other firms, soul-searching and reorganizations have been the order of the day.
Gordon S. Macklin, chairman of Hambrecht & Quist Inc. of San Francisco, took a hard look at his company's activities and tried to more closely link revenue and costs.
As a result, the brokerage firm has dropped to 250 employees from 350, he said.
H&Q specializes in raising capital for young, emerging high-tech companies. This is an investment area that has been battered as investors have shied away from stock offerings of untested companies.
Macklin predicted that, with bank financing often unavailable these days, emerging growth companies would return to the equity markets for capital.
"The good news for the companies is that capital is available," he said. "The bad news" is that companies won't be able to sell their shares for as much as they once could.