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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: 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. On the other hand, I think the Morgan Stanley Dean Witter (NYSE:MWD) model has served that form well, a combination of both retail and the institutional. The culture is a bit different, but I think that the key element of both is the global franchise, built organically over an extended period of time. We are looking for the secular drivers in Europe to lead the investment banking business there to outpace the business within the US, and I think that firms that are leveraged to those markets have a clear advantage in profitability. Within the asset management sector, the most important element driving flows, especially in mutual funds, is performance. But it is not the only element. When you have solid performance coupled with distribution, you tend to gain share. Within the overall asset business there is tremendous variance in the rates at which specific businesses will grow. We’re looking for mutual fund sales to decelerate and for the managed account business to pick up. There is strong potential growth within the retirement business, especially with higher limits, and the international business, particularly in Europe, although it doesn’t appear that many of the US firms have good access to it.

TWST: Why are you focusing on Morgan Stanley Dean Witter?

Ms. Solotar: Morgan is more diversified, which I think has appeal for many investors. Institutionally, like Goldman, it’s one of the few tier-one companies that has strong franchises across a large number of European countries as well as in the US. In terms of retail ability, it has one of the better distribution systems from the standpoint of delivering proprietary products. So while productivity levels are not as high as those at Merrill Lynch (NYSE:MER), it sells more proprietary product than other brokerage firms. Morgan, compared to other brokerage firms, has one of the better performing asset management groups. It has large number 4 and 5 star-rated funds and has good flows into those funds.

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.