The Relavance of Small Broking Houses
-Letter to Money Life
Dear Ms. Dalal,
One day a senior citizen walked into my office; he was emotionally disturbed and was upset about something. As a member of a RSE and hailing from a family having its roots in the business of share broking as early as 1930s, we still have the habit of meeting the new clients/ first time investors personally, before we handover their affairs to our dealers. Used to this “bad” habit, I met this old gentleman who was in his seventies. I spent almost an hour with him!
This was his story: he is retired from military services about two decades ago and he has all his savings in his bank account only. Fifteen years back, his bank manager whom he trusts suggested applying for a new issue and he did so. Though he got an allotment of small number of shares, he was told that they are not at all trading due to the fall in the market in 90s.
A couple of years ago he was told by a neighbour who trades in the shares that his shares have started trading again and hence he approached a big broking outfit. The regular advertisements in the news papers & magazines and the huge hoardings put out by this broking company convinced him that they are the right people to encash his investments. He was impressed by the interiors and the reception he had.
But it was a short lived one because things changed the moment they assessed the unimpressive size of his portfolio. He was made to wait in the lounge for a very long time and after frequent visits he could finally open a demat account to dematerialize his shares for selling them later. He was made to sign a lot of paper without proper explanations. He was cursing himself for entering the capital markets. He never thought he has to go through so many procedures without being explained. As a old man he was apprehensive while he was made to sign the dotted lines.
He was terribly upset at the kind of treatment meted out to him and the change in the attitude of the staff at this broking outfit, which has its branches all over India . Somebody has suggested him to try out a “small broker” and hence he has come to me! He was so happy that he could finally speak directly to somebody responsible & knowledgeable –i.e., to the Broker himself! After explaining him about the purpose of demat account and the latest procedures to open a trading account with a broker, I put him on to my dealer.
Two days later, after collecting his payment from our office, he walked into my room. He was visibly moved. He was in tears! My wife - a post graduate – also works with me in our office; he called both of us and blessed us! He was a lonely man; He said both his children are settled abroad and are never going to comeback. He was very happy about the way we handled his account. He told us that, at one stage he wanted to get out of the equity markets due to earlier experience and after this interaction he would like to reconsider his decision.
This is not a “chicken soup for the equity soul” ……! This is a real incident..
A Country with less than 1 % of its population investing in stocks, this breed of smaller traditional brokerage firms – who are instrumental originally in creating the equity markets in India – are doing a wonderful job to retain & bring the small investors to the markets. But in a world which thrives on media glitz, no body has recognised this fact. I am glad that you have done it.
The traditional broking houses act more responsibly because of their long term relationships with the clients. In some of the firms, the relationship dates back to a few generations and are close family friends. Brokers are part of the investors” family and attend all their family functions without fail. It also helps them in jointly planning their investment needs and set their goals based on the family’s needs. These brokers try to be more sincere in advising their clients because if things go wrong, they are answerable not only to the investor but also to the people from the extended family who call them “uncle” and “bhaiyya.
Thank you once again for recognising the need for and the usefulness of the smaller and traditional broking houses.
One day a senior citizen walked into my office; he was emotionally disturbed and was upset about something. As a member of a RSE and hailing from a family having its roots in the business of share broking as early as 1930s, we still have the habit of meeting the new clients/ first time investors personally, before we handover their affairs to our dealers. Used to this “bad” habit, I met this old gentleman who was in his seventies. I spent almost an hour with him!
This was his story: he is retired from military services about two decades ago and he has all his savings in his bank account only. Fifteen years back, his bank manager whom he trusts suggested applying for a new issue and he did so. Though he got an allotment of small number of shares, he was told that they are not at all trading due to the fall in the market in 90s.
A couple of years ago he was told by a neighbour who trades in the shares that his shares have started trading again and hence he approached a big broking outfit. The regular advertisements in the news papers & magazines and the huge hoardings put out by this broking company convinced him that they are the right people to encash his investments. He was impressed by the interiors and the reception he had.
But it was a short lived one because things changed the moment they assessed the unimpressive size of his portfolio. He was made to wait in the lounge for a very long time and after frequent visits he could finally open a demat account to dematerialize his shares for selling them later. He was made to sign a lot of paper without proper explanations. He was cursing himself for entering the capital markets. He never thought he has to go through so many procedures without being explained. As a old man he was apprehensive while he was made to sign the dotted lines.
He was terribly upset at the kind of treatment meted out to him and the change in the attitude of the staff at this broking outfit, which has its branches all over India . Somebody has suggested him to try out a “small broker” and hence he has come to me! He was so happy that he could finally speak directly to somebody responsible & knowledgeable –i.e., to the Broker himself! After explaining him about the purpose of demat account and the latest procedures to open a trading account with a broker, I put him on to my dealer.
Two days later, after collecting his payment from our office, he walked into my room. He was visibly moved. He was in tears! My wife - a post graduate – also works with me in our office; he called both of us and blessed us! He was a lonely man; He said both his children are settled abroad and are never going to comeback. He was very happy about the way we handled his account. He told us that, at one stage he wanted to get out of the equity markets due to earlier experience and after this interaction he would like to reconsider his decision.
This is not a “chicken soup for the equity soul” ……! This is a real incident..
A Country with less than 1 % of its population investing in stocks, this breed of smaller traditional brokerage firms – who are instrumental originally in creating the equity markets in India – are doing a wonderful job to retain & bring the small investors to the markets. But in a world which thrives on media glitz, no body has recognised this fact. I am glad that you have done it.
The traditional broking houses act more responsibly because of their long term relationships with the clients. In some of the firms, the relationship dates back to a few generations and are close family friends. Brokers are part of the investors” family and attend all their family functions without fail. It also helps them in jointly planning their investment needs and set their goals based on the family’s needs. These brokers try to be more sincere in advising their clients because if things go wrong, they are answerable not only to the investor but also to the people from the extended family who call them “uncle” and “bhaiyya.
Thank you once again for recognising the need for and the usefulness of the smaller and traditional broking houses.
I totally agree....In fact I think all those in ANY service industry especially when they deal woth a persons health and wealth should learn the art of "human interaction". I had the opportunity of conducting seminars for a company called CAMS's dealer network and its principals , the Mutual Funds on Customer expectations - the future and how to meet them....the Key , operative word is Effective Communication...that only takes place Face to Face.
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