When the salesman has once put through a piece of business with an investor, he has made a client, for a man who has money to invest at one time will probably have money to invest at another time. Even if the inves tor lives up to his full income, he will prob ably have some investments maturing, part of his capital paid back from time to time. If our salesman has grit to stick to the work, energy and resourcefulness in prosecuting it, he will gradually build up a clientele which will be as valuable an asset to him as the clientele of any professional man. But after all, this aspect of the selling problem of bank ing houses does not differ greatly from sell ing through a personal representative in any kind of business.
When most young men first entertain the idea of selling securities, they think of visit ing financial institutions, especially of calling at the banks. In the largest financial centers some salesmen, who have developed in that direction and to that point, do confine them selves largely to the financial institutions. Outside of the largest centers, and even in those centers except for the specialized sales men, selling to these institutions will form only a small part of the work of the bond sales man. In the first place, selling to them at all must depend upon having available to offer the kind of securities they buy. If the sales man is approaching the investing officer of a savings bank or an insurance company, he must be able to offer securities in which they may legally invest. If he is endeavoring to sell to an ordinary bank of deposit, he prob ably will not have a chance of success unless he is offering some very active market se curity protected by an equity. Some trust companies, acting more in the capacity of savings banks than of commercial banks and, outside of the States in which the sav ings bank is well developed as a financial institution, some national and state banks which people use much as savings banks, may invest to some extent in relatively slow market securities. Some of these banks un doubtedly go too far in this direction: for any security which is a legal investment for savings banks in the important savings banks States enjoys a rather ready market.
Institutional business of this kind is much more highly competitive than selling to pri vate investors. The personal relationship of the salesman and the purchaser is not so important. The institution will buy from any salesman who offers, at a time when it is in funds for investment, securities which are of a kind and at a price to make them the best offering presented. The fact that an institution once buys from a particular salesman does not carry any probability that the next time it has funds to invest it will invest them through the same sales man. It makes a regular business of buy
ing. Most capitalists make the business of investing only an incidental matter. They are much more likely to rely on one or, at most, a few salesmen through whom to make their commitments. It is the list of private investors, who are clients of a banking house, that furnishes the best foundation for finan cial strength.
Salesmen for the banking houses vary in quality. Some have little knowledge of se curities or skill in salesmanship and are hardly more than canvassers, but they never theless succeed in doing some selling. From the low level they grade up to men expert in salesmanship and often having an extended knowledge of financial matters. These higher grade men achieve a good professional stand ard and become real financial advisers to their clients.
Most banking houses have a simple or ganization. If the organization is complex, it is so because of activities other than those strictly of the investment banker. Com mercial loans, foreign exchange, engineering and operating departments, outside of the business of finding funds for municipal and private corporations, sometimes extend the scope of the banking house to that of a com plex concern. In the house that confines it self to dealing in securities, the work of any one man may take him into all the fields cov ered by the work of the house. Usually an investment banking organization makes at least four general divisions of the work the selling, the buying, the statistical, and the cashier's departments.
We have already discussed the work of the bond salesman in selling. The work of the sales department looms large in the bank ing house as in any other merchandising or ganization. The buying department may buy only if the selling department can sell.
On the other hand, it is as true of the securi ties business as of any other that goods well bought are half sold. In the office a member of the firm, or a sales manager, will have charge of the selling. It will be his duty, and, if the house is one of some magnitude, that of his office assistants, to keep closely in touch with the salesman. They may send the salesman a daily letter of information and advice. They will write letters at the request of the salesman and of their own initiative to clients of the house. Usually the salesman will send in daily reports of his work. These reports contain information the salesman has gathered about the needs and holdings of his clients. From these reports the office organization makes a record of such matters as when the client is likely to be in funds for investment, what kinds of securi ties he will invest in, and the names of any securities the salesman may have learned that he already owns.