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For brokers, competition is everywhere

The competition continues to heat up in the financial services industry.

With Internet sites from Yahoo! to the Motley Fool and Morningstar offering free information on stocks and mutual funds, as well as information on a wide range of investment topics, money managers and brokers are facing increasing competition.

In addition, the consolidation trend within the financial services industry has brought the "one-stop shop" approach to many firms, ranging from insurance firms to banks, which now offer investment services alongside their traditional products.

"It's much more competitive," said Stephen Robshaw, a partner at Robshaw and Julian Associates, an Amherst money management firm. "It's just part of the world these days."

At the same time, though, the appetite for financial advice is growing, especially as the leading edge of the Baby Boom generation gets closer to retirement age. Investors are facing growing concerns about whether they will have enough of a nest egg to support a comfortable lifestyle once the regular paychecks stop.

Amid that backdrop, the deal-making continues to reshape the industry. In September, KeyCorp agreed to sell its McDonald Investments retail brokerage business to UBS AG, the world's biggest money manager, for as much as $280 million. McDonald has one office in the Buffalo area, on Essjay Road in Williamsville. UBS has two offices, one in the HSBC Center downtown and one on Main Street in Williamsville.

Giant brokerage firms like USB and Merrill Lynch & Co. are eager to expand their networks of brokers to build up their wealth management and brokerage businesses. UBS also bought the brokerage unit of Minneapolis-based Piper Jaffray Cos. in August in a further big to build up a wealth management business that CEO Peter Wuffli had called "somewhat insufficient."

Merrill Lynch executives also have said they want its private client business to generate more of the firm's revenues. "The expansion plan for this business unit is to broaden the suite of everyday financial products, including bank deposits," said Philip Guziec, a Morningstar Inc. analyst, in a report.

For do-it-yourself investors, who had fared well during the market's heady gains in the second half of the 1990s only to receive a rude awakening when stocks slumped badly from 2000 to 2002, the Internet has opened up a wealth of new resources and information that can compete with traditional investment advisory services.

Yet the topsy-turvy market of the last decade still has plenty of investors seeking advice. As a result, banks also are trying to be a bigger player in the game, building up their investment- services business by offering mutual funds and other investments to depositors. Financial advisory firms, such as Axa Financial and Ameriprise Financial, which cater to investors with more modest nest eggs, also are expanding.

Banks also are targeting financial services as a way to bring in additional fees and establish broader relationships with their wealthier customers by handling their investments and insurance needs, as well as providing banking services.

Accounting firms are feeling the same pressure to get bigger. The Bonadio Group, a Rochester- based accounting firm that acquired Fiddler & Co. in Buffalo two years ago, moved into the Syracuse market this month with its acquisition of Loguidice & Kamide.

"Our goal is to be the dominant mega-firm in the upstate area," said Thomas F. Bonadio, the firm's managing partner.

"In the post-Enron era, one of the biggest opportunities is to take a lot of the work that's being tossed out by the Big 4 firms," he said.

"If you're going to be able to compete for that work, you need to have talent" and a staff that's capable of taking on those added duties, he said. "It also helps you recruit people. It's a competitive advantage," because firms can offer recruits the chance to work in different markets.


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