Aggressive Recruiting by First Union Securities Yields Impressive Numbers
Securities Week
July 3, 2000
With its acquisition in May of First Albany’s retail brokerage assets and more than 200 brokers plus the recruitment of hundreds more from competing firms in the last year, First Union Securities has drawn a lot of attention from around the industry.
The firm combines the “power and economies of scale” of a nationwide brokerage operation with a regional firm’s culture, according to First Union’s president and CEO Daniel Ludeman.
“First Union continues to expand and recruit aggressively throughout the country with no apparent letup,” noted recruiter Rick Peterson, president and founder of Houston-based Rick Peterson & Associates, whose web site is located at www.rickpetersonassociates.com. Peterson added that First Union has lured talent from all the major firms.
In a telephone interview, Ludeman said that First Union’s private client group, comprised of all the retail brokerage operations, such as Wheat, Everen, and First Albany, that the firm has acquired more than 7,000 brokers and between 360 and 370 offices in 43 states, making it the sixth largest broker-dealer in the country. The firm’s customer asset base has grown in the last three years, Ludeman added, from $75 billion to about $200 billion.
Ludeman acknowledged that aggressive recruiting is part of the firm’s plan to expand its business. He said that First Union is determined to position itself as the “firm of choice” among brokers. A former broker, who started with Wheat First Securities in Washington, D.C. in 1979, Ludeman said the key to achieving these goals lies in treating First Union’s brokers like clients. His comments echoed those made recently by Bob Michelotti, a regional manager who left Prudential Securities to open up the Midwest for the mid-Atlantic regional firm, Ferris, Baker Watts. In an interview, Michelotti said that he sees the brokers who work for him as clients, in a sense, or, as extensions of the firm’s customers, adding, “if I do what’s right for the brokers and they do what’s right for their clients, we win the game” (SW, 5 June, 1)
First Union strives to provide its brokers with a flexible platform to serve customers, Ludeman said. For example, he explained, brokers with First Union have the choice of working directly under the firm’s corporate banner, or as an independent contractor. Then, too, First Union brokers have an array of banking and traditional brokerage products – money management, debt management, lending options, estate management, flexible pricing – to offer customers, Ludeman added. He also noted that First Union has an in-house marketing department devoted to working with brokers to create customized investment brochures, tailored specifically to a particular broker.
Ludeman maintained that First Union is the “most successful bank/brokerage combination out there,” pointing out that in addition to a high broker retention and addition rate, production has grown 100% since the merger of Wheat and First Union.
Arguably, it is the brokerage business that props up the banking business for First Union’s parent company, First Union Corp. First Union Corp. recently announced that it would sell some of its units to compensate for losses incurred by the poor performance of The Money Store, the home-equity lender it bought two years ago, which it is closing, and CoreStates Financial Corp., which First Union purchased for $20 billion in 1998.
As much as Ludeman touts First Union’s “regional culture” and supportive relationship with its brokers, some industry sources attribute the firm’s recruiting successes simply to big deals, such as 100% up-front bonuses. One source said, for example, that after many years in the brokerage business, he never has heard a broker tell another that he couldn’t wait to work for a bank, or that money didn’t matter.
According to Ludeman, First Union’s primary areas of focus for recruiting currently are Florida, where it has opened nine or ten offices in the last eighteen months, and the West Coast. Typically, Ludeman added, First Union brokers look to take on customers with at least $1 million in investable assets, though, in this age of one-stop financial services shopping, the firm also wants to get a “larger wallet share” from existing First Union clients.