J.C. Bradford & Co., the 68-year old brokerage firm headquartered in Nashville, has grown to include 83 offices in 15 states, primarily in the Southeast. The firm of 1,888 employees has over 250,000 retail customer accounts with assets under management of more than $19 billion.
Its seven trading desks - located in Louisville, Ky.; Cleveland; Macon, Ga.; New Orleans; Charlotte, N.C.; Del Mar, Calif.; and Nashville - provide customized personal service to both individual and institutional investors.
Revenue from municipal bonds was approximately 20% of the firm's total profit in 1995, 15% lower than the firm's normal figure. But firm professionals predict a bright future for the Southeast municipal market with the region's continuing population growth and increased demand for government services.
Miriam Sisk, Municipal Retail Marketing Manager and Investment Limited Partner
Miriam Sisk is expecting a relatively slow year for long-term municipal bond sales in the Southeast due to investors' reluctance to invest in the current interest rate environment and flat tax fears.
"People are scared to invest long-term, or even intermediate in some cases, so we're anticipating a year that's not so busy," Sisk said.
Recent market conditions have prompted some Southeast retail investors to steer away from bonds, but population growth and rapid development in the region is creating the need for capital projects, many of which will need to be funded with bonds, Sisk said.
Investors should not "sit on the fence and wait" when an opportunity arises, she said.
"If one has the money for investing and the opportunity is there, that's the right time to invest," she said. "Whether you choose to ladder your maturity every other year would certainly be appropriate, but we're not going to back off and stop selling."
Headquartered in Nashville, J.C. Bradford & Co. has 83 offices in 15 states, primarily in the Southeast. Their clients, both individual and institutional investors, can take advantage of the firm's six trading desks in New Orleans, Macon, Ga., Charlotte, N.C., Louisville, Ky., Cleveland, Del Mar, Calif., and Nashville.
Eventually, when the market picks up, the firm will be looking to the tremendous growth in the Southeast, Sisk said
"Tennessee, South Carolina, and Kentucky are our best distribution states," said Sisk. "But I think the infrastructure needs of the country are going to be apparent everywhere."
Tax reform, in Sisk's opinion, should not pose a problem for municipals.
"Even if a flat tax were (to pass) municipal bonds will still be present in the long run," Sisk said. "Cities and counties are still going to be borrowing money and that will open up the field of investors."
Professional:
1990 - Present, Municipal Retail Marketing Manager and Investment Limited Partner, J.C. Bradford & Co.
1983 to 1989, Trader, Tax-Free Unit Investment Trust Department
1981 to 1982, Administrative Assistant in the Municipal Bond Department
Education:
1981, B.S. in Office Administration, David Lipscomb University
Cindy L. Russell, Investment Limited Partner, J.C. Bradford & Co.
Cindy L. Russell doesn't believe her retail business has been affected by marketplace concerns over the flat tax.
"I have very few customers with questions about the flat tax because we all know what a mess it is in Washington D.C. right now" said Russell, an investment limited partner at J.C. Bradford & Co. "So no one has a lot of confidence in that passing, at least not anytime soon."
For this broker, who is in the top 10% of J.C. Bradford's retail salesforce, municipal bonds are the way to go. The market's currently low interest rates, she said, should not scare investors.
"No matter how low rates go, a tax-free bond is still going to be much more attractive than what one can get with a certificate of deposit at the bank," Russell said.
Financial safety and a fixed rate of return has kept her clients - primarily retirees living in the Memphis area - satisfied, she said.
"My customers know they can count on a fixed rate of return that's tax free. They're so spoiled with tax-free fixed income, they don't even think of the stock market," she said.
The most important trend Russell has noticed in the retail municipal market is that municipalities are not issuing as many bonds as they did in the 1980's. Possible reasons, she noted, may be the higher rates they have to pay because of the flat tax scare as well the Orange County debacle.
"We have to know that those issues are out there and the talk makes municipalities nervous about issuing new bonds because they're going to have to put a tremendous rate on them to push them if they're not going to be tax-exempt anymore," Russell said.
But such worries do not shake Russell's faith in bonds. This self- proclaimed cheerleader for these products plans to stick with bonds for the long haul.
"My customers sleep safe at night and so do I," she said.
Professional:
1992 - Present, Investment Limited Partner, J.C. Bradford & Co.
1989 Investment Vice President
1983-1989, Dividend Clerk and Broker, Union Planters Investment Bank
1982, Kahn & Co.
1982, Sales Assistant, PaineWebber Inc.
Education:
University of Memphis, 1979 to 1982
J. Ronald Scott, Partner and Head of the Municipal Bond Department
The cloud hanging over the municipal bond industry will clear in the latter part of 1996 once the election is over and there has been a correction in the stock market, according to J. Ronald Scott, partner and head of the municipal bond department at J.C. Bradford & Co.
"It's like we've been in a fog in 1995 and now the fog's beginning to lift," he said. "As the year goes on, it's going to be clearer that municipals will continue to be tax-advantaged."
What has really hurt the market is the idea of having all interest and dividends tax free, Scott said.
A flat tax, however, is unlikely to become a reality, because it would be inherently unfair to the vast majority of taxpayers, Scott said.
The most powerful selling tool for municipals, Scott noted, is the safety of principal, followed by the yields as compared to taxable alternatives.
"The 5.4% you can get right now in a high-grade double-A long-term municipal is like getting a 9% return in a taxable bond," Scott said. "You can't find 9% in anything but junk, so munis are a better investment."
In the current market climate, Scott advises his customers to play conservative, building a laddered portfolio with a combination of long-term and short-term municipal bonds. Interest rates are being affected by financial activity across the globe, and that's one reason investors should take such cautionary measures.
"We don't want our clients to put all their eggs in one basket," Scott said. "Things could get treacherous with long-term interest rates rising."
Professional:
1976 - Present, Head of Municipal Bond Dept., J.C. Bradford & Co.
1975-1976, Acting Manager, Municipal Bond Department
1968-1975, Clerk and Trader in the Municipal Bond Department, Head of the New York City Municipal Bond Department
1965-1967, Licensed Real Estate Agent, Richland Realty
1960-1965, Branch Manager, Nashville Home Federal Savings & Loan
Education:
1958 - 1961, Attended Vanderbilt University
