The Important Matter of Wood Leads

In a brokerage firm there is a hierarchy.  There is the boss, partners, senior brokers, junior brokers, account openers and the lowly cold callers. The cold callers work for the account openers, who work for the senior brokers. The junior brokers, generally speaking, are new and without coin. Therefore, they are pikers and cannot afford to staff up.

When I was a cold caller, I got paid $190 per week, working for the biggest broker at the firm, who employed an army of 6 account openers, a dedicated secretary, and about 10 cold callers. Typically, account openers were paid the princely sum of $400-500 per week. It was a machine. The cold callers got around 5-10 leads per day, which was then passed onto the account openers, who’d open 1 out of every 10 leads. After the account was opened, the senior broker would “second trade” the new account and try to raise big money. In the event the new account was a dead end, he’d send the account to junior broker to work, splitting the commissions 50/50.

In the brokerage business, time is money and senior brokers don’t have time to waste on clients who are small or unwillingly to gamble recklessly with his life savings.

This firm that I worked for was the Godfather of high sales tactic mentoring for young aspiring brokers out of college. It was a place that can never be duplicated, because it was the thing of legend.

The firm was situated so that every broker, big and small, was in the boardroom. There were no corners or cubicles. It was like a giant airplane hanger with men smiling and dialing, pitching people so that they could meet their monthly lease payments. There was about 100 brokers, 50-75 account openers and another 100 cold callers, all in one giant room. Only management had offices–but they were rarely in them– since they’d prefer to police the floor for brokers violating rules, such as looking at charts or not dialing for a period longer than 1 minute. EVERYONE was pitching, non-stop, from morning to night.

You had one job to do at this firm and that was to sell. We were told, ad nauseum “we’re not fund managers here. We are here to sell stock. That’s it.”

Morning meetings started at 8 am sharp. If you were a broker and walked in late, while one of the partners was giving a speech (always by way of microphone, at a podium), you were fined $1,000. If you were a lowly cold caller or account opener, more often than not, you were fired for such an offense. I recall getting off the train at 7:58, knowing that I wouldn’t make it in on time and resolving such a crisis by hopping back on the train and calling in sick. It’s also worth noting that this firm practiced Darwinism with regards to the amount of chairs/desks available in the cold caller pits. There was always 5-10 less chairs/desks available than actual employees. Those who didn’t have a chair were tardier than the others– and was sent home without pay.

If you were still on the phone as the meeting began, your phone call was put on the speaker system for everyone to hear. Everything you said was critiqued by just about everyone, especially the bosses. The top partner, who gave the morning and evening meetings, would often walk over to the person who was pitching and feed him lines. If that didn’t work, sometimes he’d take the phone from him and convince the guy on the other end of the phone to buy stock. Like I said, it was surreal.

After the meetings, it was time to get to work. Being a lowly, unlicensed cold caller, I was not permitted to solicit stocks. My job was to call as many people as I could, from leads provided to me by my senior broker, and qualify them. Some brokers are more lenient than others in this regard. But my broker insisted that a qualified lead meant the gent had to have 500k+ in the market, did business with more than one firm, and was receptive to doing business over the phone. You had to find out at least one stock that he owned and what firms he did business with. It was imperative that this information be credible, else the account opener would look stupid and lose the initiative when making a sales call.

Generally speaking, an account opener would call a “new lead” after literature was mailed out and introduce himself by saying “you spoke to an associate of mine and you said you owned 5,000 shares of GE with Piper Jaffrey, is that still the case?” Now if the information wasn’t accurate and the “lead” said “no I don’t know what you’re talking about”– the account opener would have to re-qualify that lead, which pretty much meant the sale was dead.

Cold callers were under intense pressure to get leads. During lunch, senior brokers would visit our confines to “skill mill.” Essentially, he’d teach us how to talk to people with money and test us by randomly picking on one of us to pitch him. You had to get up in front of 100+ cold callers and qualify the senior broker, who, more often than not, was completely irrational–just to make life hard for whoever was pitching him. We did this three times per day, morning, lunch and after the close.

If you didn’t get 5-10 leads per day, you were not going to earn the right to study for your series 7 and start making the real money. And, you’d probably get fired. Most cold callers were miscreants of the first order, totally devoid of honor and integrity. They’d simply make up stuff, write it on an index card, and hand it in. They hoped to guess right, putting popular stocks like Lucent and Microsoft on the lead, but it backfired very, very often.

If your lead was bad, it was called “wood.” If you gave your account opener a wood lead, he’d walk over to you, rip it up and throw it in your face. If you did it again, you were fired.

I made it a point to never lie about the leads that I got. I took pride in my leads and worked until midnight, if need be, to get 10 leads per day. No one worked longer hours than me because no one was as hungry as me, living in a basement apartment in Brooklyn with my wife and new born son. My family didn’t have money, since my Grandfather decided it was a good idea to burn his furniture stores down, as some sort of idiotic insurance racket. Shortly thereafter, he lost his vision and was unable to work. Karma can bite hard sometimes.

So I had no choice but to bank coin, else I’d end up being a loser and that was not part of my gameplan.

After nine months of working at this stock broker pressure cooker, I was granted the right to study for my series 7. It was a major accomplishment. I had to pitch the CEO of the firm for such a privilege.  Things were going well and I knew it was only a matter of time before I too would be making 200k per month. I knew how to sell and that was all that mattered, at least that’s what I thought at the time.

Then one day a junior rep, who looked like a leprechaun, walked over to my cold caller desk, ripped up a lead and threw it in my face. He said “stop writing wood” and walked away. Back then I had a very bad temper, being that I felt the world was always working against me. So I got up, walked over to my senior broker, who I respected immensely, and quit. He called me that evening in an attempt to get me back, but I was gone. I couldn’t go back to that place after being insulted–a small pet peeve of mine picked up by my Italian Grandfather who fancied arson to get ahead in life.

By the end of that week, I had a new gig at a much smaller firm, working for a much smaller broker, who once tried to order me to get him coffee. That didn’t work out well for him.

To be continued.

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