Fresh off the heels of its JW Genesis acquisition, First Union Corp. wants to expand its platform for independent brokers, says Don McMullen, vice chairman and head of the Capital Management Group at First Union Corp.
Speaking at a Putnam Lovell Securities Financial Services Conference on Monday, McMullen admitted that First Union can’t possibly go up against wirehouses like Merrill Lynch or Morgan Stanley with dollar-for-dollar national advertising campaigns. But he said First Union definitely can become the “firm of choice” for financial advisers because of the options it offers: full-service brokerage offices, First Union bank branches, a platform for independent contractors and private offices that serve wealthy Worth investors.
Some brokers crave the structure of a full-service environment. “We can do that,” said McMullen. Others who hate cold calling and pushing products can be successful in First Union banks. And brokers who “just want to do their thing” can sign on with the independent division, called the First Union Securities Financial Network, McMullen said. “We want to be bigger in this channel,” he said.
McMullen said the firm has been successful in integrating its different brokerage channels, offering the same broker technology and array of products to brokers across all channels. For example, a former Everen broker in California has access to the same InfoMax workstation that a former Wheat broker in Virginia or a bank broker in Charlotte has available, he said.
McMullen said that First Union has placed brokers inside its bank branches since 1994 and now has about 2,000 to 3,000 licensed investment professionals in its 2,193 bank branches, which it calls “financial centers.”
McMullen presented a chart showing that the firm’s independent brokers are the most successful brokers in the organization when it comes to generating fee business. About 50% of the revenue generated by independent brokers is “recurring revenue,” according to the chart. Only 30% of the full-service channel revenues are recurring, the chart shows.
To view McMullen’s charts, go to www.ftuinvestor.com and click on the presentation link at the bottom of the page. An audio replay of McMullen’s comments is also available at www.putnamlovell.com.
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