By James Langton

(November 7 – 11:20 ET) – The Wall Street Letter reports that brokerage firms in the U.S. are girding themselves for a bear market, warning that many brokers could leave the business as a result.

“Many Wall Street participants are forecasting leaner times in 2001,” says the newsletter, which talked to industry officials, reps and recruiters. It says if the brokerage business is hit by a slowdown, broker movement will drop, as will raiding compensation.

“You don’t change firms in a bear market. Clients will be a lot less likely to go with you then. They’ll remember the stock you sold for $50 that1s now down to $30,” a wirehouse branch manager said.

A bear market would likely also cull a large number of brokers from the business, the newsletter says. “I think there are a number of younger brokers on the lower end of the food chain who don’t know a hell of a lot and have been riding on the gravy train of this market for a long time. I think you’ll see them leave if there’s a down turn in the market,” a branch manager suggested.

While most of the managers, recruiters and reps agreed that the rookies would be first over the side if the market turns, there was also a view that some of the dinosaurs would go too, particularly those that have been riding the markets to higher asset bases. “You need to go out and prospect for business in a bear market. People who can’t do it won’t survive,” one veteran concluded.

Recruiters also suggested that raiding packages will slip from 100% of brokers’ trailing twelve months’ commissions to the 40% to 80% range.