PaineWebber trains 1,200 brokers a year on everything from new products and new regulations to legislation and sales tactics. Morgan Stanley Dean Witter trains 1,800 brokers. And Salomon Smith Barney educates 800 brokers.

Those numbers sound impressive. But get this: Phoenix Duff & Phelps trains 12,500 brokers and Van Kampen more than 2,500 brokers every year. Even the big brokerage firms dont seem to be able to handle the basic product training for all of the cadets. Either that, or product vendors have more resources and more incentives to get brokers to understand various products. Or, vendor resources are themselves incentives--for the dealers. Vendors routinely pay for such appearances, even for generic education.

And that raises questions of conflict. A scrappy little mutual fund with a whiz-bang approach to investing is unlikely to get the exposure that an index fund run by a major vendor would. A wholesaler whos aces on Roth IRA rules may never see a broker unless his product has anted up.

Product vendors, though, ask who better to train a rep than the creator of the product? They say there is a big difference between marketing and training. But make no mistake: Most major vendors would love to eliminate the pressure theyre under to cough up training, sponsorships and cash to brokerage firms.

Banquetmail? Actually, there is nothing barring a brokerage firm from bringing in various product vendors to train brokers. However, the issue does take on regulatory implications when the firm requires remuneration from product vendors. There, NASD Conduct Rule 2830(1) comes into play, saying special compensation deals with vendors are supposed to be disclosed. They rarely are. But even more than the regulatory requirement is the ethical consideration.

Of course, there is pressure to bring in certain investment products. I try and resist as much of that as possible. Sometimes you have to do it. And sometimes it turns out that there is value in that, says one branch manager at a major wirehouse who declined to be identified by name or firm.

Indeed, most wirehouse executives refused to even speak about the subject. That is something we dont feel like we should or can comment about, says a spokesperson for a major firm.

Another off-the-record salvo often fired at brokerages from product vendors is that payment is expected. A $15,000 or $20,000 payment to help out with marketing expenses is common, says one mutual fund wholesaler. When asked if he thought that money really went toward marketing, he says, Cmon, its 50 or 75 guys in a banquet room. How much can that cost?

Brokerage firm executives have long denied any such payment system. It just simply doesnt happen, says Alan Sislen, director of the managed money program at Merrill Lynch, Jersey City, N.J.

Outside product manufacturers, though, say payments come in a variety of forms and are deemed a cost of doing business. Gary Demoss, senior director of sales training and development at Van Kampen in Oakbrook Terrace, Ill., says, Lets face it, wed like to do it for free but its an increasing cost of doing business. Demoss says brokerages now are asking vendors to find ways to increase brokers productivity.

Most recently what weve seen happen is they are calling for value-added [training] that is not focused around any product or vehicle, he says. To satisfy the new brokerage want, Van Kampen has developed a speakers bureau divided into three parts: traditional product training for accounts that still want that; market overviews, where economists and strategists speak; and the value-added section, which includes courses on investment consulting, communication and modern portfolio management. Training, of course, all comes under the guise of marketing.

The two go hand in hand, says Demoss. Marketing is creating a platform to sell. The training is really what I would do once I got in front of a group.

Brokerages do set parameters about what a vendor can and cant speak about. Some of them say they dont want product-pushing, Demoss says. But whenever we get the chance to speak about a product, of course we speak about ours. He says brokerage executives understand that the product vendors need exposure. We both understand it needs to lead somewhere. And if we can provide value, we hope the broker will remember us when he goes to sell a product, Demoss says.

Other vendor firms have put in place similar programs. Jack Sharry, executive vice president of retail at Phoenix Duff & Phelps in Hartford, Conn., agrees that the business of training has moved past the product familiarity phase. Now its about research and how you can bring greater value to the intermediary. Thats the new battleground.

NASD rules require firms to write up continuing education needs analysis. This gives firms wide latitude to decide what kind of training is needed and from whom.

Once a firm does its needs analysis and has a training plan specific for the firm, it is responsible for researching and deciding whether a certain vendors products meet the firms needs, says Diana Berger, head of the continuing education committee for the Securities Industry Association. She says the securities industry has always provided training to its sales force, but the extent to which product vendors can mask marketing efforts as product training is a function of the individual firm.

The NASD passed a regulation in 1995 formalizing what we have always had in the industry--sales training and education, Berger says. Now if a firm decides from its needs analysis that there is an area where its registered representatives need to be trained, then it is up to them to bring in whomever they see as the best fit. However, she says, I would not consider marketing a training course. Marketing is how you present something to a prospect. Product training is a very specific program for education.