Merrill Lynch Competition
Now Viewing Merrill Lynch's competition in: Securities Brokers
Recent Developments
Downturn in Corporate Acquisitions can Yield High Returns - Corporate acquisitions during down years can yield higher returns than deals made during boom years, according to <em>Forbes</em>. A recent <em>Forbes</em> analysis finds that companies that made acquisitions during the 2001 to 2002 recession delivered almost triple the excess returns of those that acquired during the preceding boom years. <em>Forbes</em> analyzed over 24,000 deals between 1996 and 2006 ranging from under $100 million to $10 billion. The finding held true across industries, although healthcare and consumer products had the largest increases; utilities and telecom had the lowest.
SEC Criticized over Leniency - Critics are concerned that the SEC isn't fulfilling its watchdog role over financial firms, including securities brokers. A Senate inquiry determined that total SEC-levied penalties fell 50 percent in fiscal 2007 from 2006, and spending on enforcement dropped 5.8 percent, according to <em>The New York Times</em>. Critics say that the SEC emphasizes promoting market competitiveness rather than protecting investors.
Brokerage Employment, Wages Rise - </strong>Higher consumer demand has contributed to rising employment and wages at securities firms. US employment in securities brokerage firms increased 2 percent in February 2008 from year ago and wages rose 2.9 percent. In contrast, average annual industry employment increased 1.5 percent in 2007 and wages, 0.4 percent.
Competitive Landscape
Demand is driven by the returns of securities markets relative to alternative investments. The profitability of individual companies depends on efficient operations and good marketing. Large companies have economies of scale in operations and high name recognition. Small companies can compete effectively by offering better customer service. The industry is highly automated: average annual revenue per worker is close to $300,000.
Securities Brokers Industry Forecast
from Hoover's/D&B subsidiary First Research
The output of US securities, commodity contracts, and investments, an indicator for securities brokers, is forecast to increase at an annual compounded rate of 3.3 percent between 2007 and 2012.
Securities, Commodities, and Investment Growth Level
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
First Research Opportunity Rating
The First Research Opportunity Rating is First Research's estimate of industry performance vs. industry risk over the next 12 to 24 months.
- Demand: Baby boomers have more money
- Need good marketing
- Risk: Falling asset values reduce fees
Industries Where Merrill Lynch Competes
- Financial Services
- Securities Brokers & Traders
- Retail Brokerages (primary)
- Asset Management
- Investment Banking
- Trade Facilitation
- Securities Brokers & Traders
