To effectively capture and service its clients, Greenwich, Conn.-based agency brokerage Weeden & Co. has taken to creating "pods," or teams of three to four traders, each with a lead member. "Each person on the team has a different skill set," explains Weeden CEO Barry Small. "One might be very good at conveying to clients our view on research while another might be good at presenting our flow and our trading opportunities to clients."
According to Small, the pods have proven very successful as a way to best serve clients. Weeden currently has 45 sales traders in 8 sales pods, he relates, but those numbers are increasing. "We're hoping to grow to about 12 or 13 pods and about 60 sales traders," Small says, noting that Weeden's sales traders have taken on a much more consultative role in dealing with clients.
Chris Mahler, managing director at Weeden, says the new sales trader consultant role has morphed away from just shopping inventory. "Now they are portfolio-enhancement specialists, technology experts and even alpha-generators in some cases, as well as execution and trade specialists," he says.
Small adds that the technology knowledge is key. "Our sales traders have to understand the technology initiatives that a client is undergoing," he says. "They have to understand how the client integrates with the marketplace and how they are looking for liquidity."
Another key to Weeden's competitive differentiation is its research, Small adds. The firm has very focused energy and distressed debt teams and partners with independent providers for additional research, he describes, pointing out that the buy side wants this type of independent research. "That's where they get value," says Small. "The client is looking for those small, hungry independent thinkers." Small says clients are depending less on the big broker research and taking a more proactive role in controlling their research options in general.
Adding to Weeden's value proposition is the fact that the firm's program trading and cash trading desks are tightly integrated. "The desks are integrated in terms of crossing opportunities and other intelligence that can be shared across the two," explains Small. "It's a big driver for this firm. We get our cash traders to trade against our programs and our program traders to trade against our cash blotter."
And as volatility and layoffs hit the market, Small says, his firm is staffing up and growing in order to provide the high-touch model for which Weeden is known. "When client business goes down, we don't reduce head count like some of the bigger guys," he asserts. "High touch is so important, we have that person in place and the client trusts that person."
Agency Brokers See Growth as Business Evolves
Automation may have taken the spotlight away from high touch trading over the past few years, but the agency brokerage model continues to succeed.
Broker-Dealers vs. Agencies: Broker-Dealers Still Get the Majority of Commissions
Dark pools are partnering and linking as they grow in popularity and in number to benefit the buy side.
Knight to Acquire Agency Brokerage EdgeTrade for FAN
FAN, the Find And Nail algorithm, created by agency brokerage EdgeTrade, has found a fan in Knight Capital Group.