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Five analysts and top management from nineteen sector firms examine the Brokers & Asset Managers sector in this special 98-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info383.htm

TWST: What will it take to rebuild investor confidence, particularly the confidence of the retail investor? Also, what will it take to rebuild confidence in the brokerage and asset management stocks?

Ms. Solotar: The retail investor needs relative market stability. After a period of euphoria related to rapidly rising stock prices, we have seen rather steady decline. Expectations for returns by many investors well exceeded the historic norms. Thus, when the NASDAQ crashed, initially investors thought that it would just pop back. But now there is a fear factor associated with individual stock investing. A gradual recovery would perhaps encourage more investors back into the market. I believe for the brokerage and asset management stocks to outperform, we need to have greater visibility on earnings trends. These stocks are not pure momentum stocks, but they are very sensitive to the next couple of quarters’ earnings. I think there’s less visibility today on the second half than we would have thought a few months ago.

TWST: How will these two sectors be affected by the expansion of the 401(k) and IRA contribution limits? Will enough people take advantage of that to make a difference?

Ms. Solotar: It’s hard to know the magnitude of the boost to the business, but certainly at the margin it could only be a positive. The majority of individuals don’t hit the limits today, and therefore a rise in the limit will not matter to them, but there is a clear number who do. I think that as it increases flows into the equities markets, which is where much of the IRA money rests, it adds liquidity and is a positive for the overall group.

TWST: In reference to your comments on mergers and acquisitions, you noted that buyers’ currency is weaker in this environment and that sellers don’t really want to sell when their valuations are so low. Does that mean that you don’t expect to see further consolidation among the brokers and asset managers this year?

Ms. Solotar: No, not necessarily. My earlier comments related to the broader M&A business, not the specific financial services sector. It’s always tough to call the deals, so I’d rather not list specific buyers and sellers. But I think that the motivations for a transaction are often related to a search for revenue and earnings growth. And I would suggest that the valuations on the brokers and the banks have not been hit nearly as hard as the valuations in technology, which is where much of the merger activity was expected to come from.

TWST: What will determine the successful broker and the successful asset manager over the next five years? Is the playing field going to be a little different?

Ms. Solotar: I don’t believe in a formulaic approach. I think you can find successful examples of firms that operate completely differently. It’s a question that we’re asked often. I believe that the Goldman Sachs (NYSE:GS) model works for Goldman Sachs. It has a culture that fosters more of a one-firm mentality; it has a very broad and deep European franchise. As the capital markets business moves along the path toward globalization, those traits should serve Goldman well.

This special issue includes:

1) Brokers & Asset Managers - In an in-depth (11,900 words) Analyst Roundtable, Amy Butte, Managing Director at Bear, Stearns & Company, Mark Constant, Senior Vice President/Executive Director at Lehman Brothers and Dean Eberling, Senior Vice President at Keefe, Bruyette & Woods, examine the outlook for the sector including, brokerage stocks performance, money fund flows and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at twenty sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Outlook for Brokers & Asset Managers - In an in-depth (2,700 words) Analyst Interview, Joan Solotar, Senior Brokerage & Asset Management Analyst at Credit Suisse First Boston, examines the outlook for the sector and shares specific stock recommendations .

5) Electronic Brokers - In an in-depth (3,600 words) Analyst Interview, L. Russell Keene III, Vice President at Keefe, Bruyette & Woods, Inc., examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of nineteen sector firms examine the outlook for their firm and the sector.