A top broker's bullish view; financial planning pedigrees

By , Business correspondents of The Christian Science Monitor

Benjamin F. Edwards III says he can see the Dow Jones industrial average going through the 2,000 level during the current bull market.

The president of A. G. Edwards & Sons Inc., the nation's eighth-largest brokerage house, noted in an interview that if this average had kept up with inflation after it crossed the 1,000 market at the end of 1965 and start of 1966 , it would be at 3,000 today.

Mr. Edwards's optimism is based on the events of this year. Six months ago, he said, if someone had said that both inflation and interest rates would be cut in half, and that unions would be taking pay cuts, no one would have thought it possible. But it has happened.

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Moreover, he finds the election results heartening. He said he was ''scared to death'' that a Democratic sweep might repudiate the nation's anti-inflation struggle. ''I hope Paul Volcker (chairman of the Federal Reserve Board) continues the tight policy he has had and keeps inflation under control.''

A.G. Edwards is a St. Louis-based retail brokerage house, that is, one largely serving individuals rather than institutional investors such as pension funds. Since the present booming market started in August, the firm's customers have been net sellers. Other major brokerage firms have also noted that individuals tend to be selling in this bull market; institutions are buying.

If the market continues to rise as expected, he admits, these individuals will give up more profit possibilities.

The firm's loans to customers with margin accounts (using borrowed money to buy stocks) have dropped from $200 million before the market boom to $60 million , he notes. That indicates individuals are cautious.

Like other brokerage houses, the high stock trading volume has raised A.G. Edwards's profits. Its own stock, listed on the New York Stock Exchange, has risen in price from $13 in early August to about $31. For seven or eight years Edwards has been the most profitable of the publicly listed brokerage houses in terms of return on capital. The present boom means more commission income for the firm and its salesmen, but lower interest rates are producing reduced returns on loans to margin customers.

Mr. Edwards says the industry has been able to keep up with the high volume of the stock market these days because of having large orders rather than a much greater number of orders. But, he admitted, ''it has been straining our computers.'' With more individuals getting back into the market starting in October, Wall Street may have a more difficult time keeping up, he reckons.

Thomas Foley is a tax lawyer. He has completed the Stanford University Executive Program. He teaches in a master of business administration program. And he is going back to school to become a ''certified financial planner'' (CFP).

Mr. Foley, who works for IDS in Minneapolis, is just one of an increasing number of lawyers, accountants, insurance salesmen, stockbrokers, and bank officers who are enrolling in courses that lead to a professional designation as a financial planner. Financial planning is rapidly becoming the new buzz word as financial services are offered by a hodgepodge of companies, ranging from brokerage houses and insurance companies to Sears, Roebuck stores and local savings-and-loans.

Certainly the numbers show that people are interested in becoming financial planners. The roster of enrollees at the College for Financial Planning, in Denver, has gone from 3,500 in 1978 to 12,000. And the number of graduates in the 18- to 24-month program, which offers the professional designation ''certified financial planner,'' has climbed from 1,500 to 4,000.

In Pennsylvania, at the American College at Bryn Mawr, enrollment has also been strong for a newly developed program leading to the professional designation chartered financial consultant (ChFC). Last month the college, which for years has conferred the designation ''chartered life underwriter'' on insurance executives, conferred the ChFC title on 2,000 men and women, most of whom are in the insurance business, who have completed the new five-year course.

Within 10 years, predicts William Anthes, president of the College for Financial Planning, nearly 20,000 people will graduate with one of its professional designations.

At the American College, Davis W. Gregg, former president, estimated that by 1987 there would be 25,000 ChFCs.

The reasons vary among people taking the courses who are already in finance. Generally they are interested in broadening their scope. Mr. Anthes says that although there is no guarantee that adding the designation will help them personally, his course, which costs $995, should also enable them to make a lot more money. He says it's not difficult for a CFP with five to 10 years of experience to gross $90,000 to $100,000 a year.

Mr. Foley, the lawyer who works for IDS, is one of a group of 200 IDS people enrolled in the program. He says the certified financial planner program ''is emerging as good training for financial planning.'' IDS tries to integrate the CFP and ChFC courses with its own internal training programs. Mr. Foley says it is unlikely that any of the 1,000 new salespeople IDS hires each year will take the courses. Only the 3,000 more experienced ones will be considered eligible. IDS pays half of the tuition cost of the courses.

About 65 percent of those enrolled in the CFP program are under such corporate sponsorship. Although most of the courses are self-study, the College for Financial Planning has seminars taught by adjunct faculty at affiliated colleges and universities.

Stanley Weinstein, who is a vice-president for trusts and financial services at Security Pacific Bank, Los Angeles, says the bank has started to encourage some of its employees to become CFPs. ''We hope to make our line people - those people dealing directly with the public - more skilled in the principles of financial planning,'' he states.

And he notes that even though financial planning has not been profitable for banks that have offered it as a service in the past, he maintains that ''it's the wave of the '80s. Customer attitudes are changing and people are looking at the bank as a place to go for financial services.''

The bull market roared back to life again last week. In some of the heaviest trading ever, the stock market rose dramatically after the elections. By the end of the week, even after a spate of profit taking, the Dow Jones industrial average sat at 1,051.78, up 60.06 points for the week. The Dow broke its highest previous level, surpassing the old high of 1051.73, set in January of 1973. Traders were once more fired up by falling interest rates and the prospects for higher corporate profits in the later half of next year. Although blue chips led the advance, investors began moving into second-and third-tier companies.

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