WealthManagement Magazine

Continuing Improvement

Although some brokers complain about the industry's continuing education requirements, others are starting to see a benefit: Rave reviews about improvements in ongoing training are coming from brokers at Prudential, Dean Witter and PaineWebber.This somewhat anecdotal trend emerged from surveying done by this magazine for its 1997 Brokerage Report Card survey (conducted in October '97 and published

Although some brokers complain about the industry's continuing education requirements, others are starting to see a benefit: Rave reviews about improvements in ongoing training are coming from brokers at Prudential, Dean Witter and PaineWebber.

This somewhat anecdotal trend emerged from surveying done by this magazine for its 1997 Brokerage Report Card survey (conducted in October '97 and published in the December '97 issue). Prior to the survey, asking brokers to rate their ongoing training often elicited scoffs and responses like: "Ongoing training? What ongoing training? If they've got it, I haven't seen it."

This year, brokers at those three firms volunteered enthusiastic reports about the new seminars and workshops they've attended in the last six to 12 months.

"I was one of the first brokers to go to the new training program, and I can't say enough good things about it. It was the greatest thing I've ever gone to," said one Dean Witter broker during the RR survey.

Last May, PaineWebber broker Richard Giles in Charlottesville, Va., attended the firm's first seminar on economics--the first of four quarterly sessions on a variety of subjects. He was one of about 1,000 brokers to attend. Giles says he was "really impressed" with the way in which Stuart Veale (who has been conducting classes for the firm's top producers) was able to get a roomful of brokers to relate to an esoteric subject like economics by illustrating the ways in which different economic indicators impact the daily business of stocks and bonds.

"There was a lot of useful information that a broker could immediately take back to his office," he says.

EVEREN reps also offered some positive comments in last year's survey about the firm's new Investment Consultant Development Program. An EVEREN spokesperson says a major announcement about that program would be forthcoming, but until then could not comment about its training. However, changes are clearly afoot at the firm's EVEREN University. In late November, EVEREN brokers got a memo about a major change in personnel.

Usually, the brokers are not aware that their attendance at these programs is being counted toward fulfilling the "firm element" of the NASD's requirements, the part developed by firms via a needs assessment that is supposed to include elements of risk and suitability. Yet, the brokerages confirm that these programs, at least in part, do help them meet the continuing education requirements.

Average Producers Benefit Continuing education requirements have pushed the firms toward filling the gap for a previously neglected segment--the mid-tier producers who are long past their initial training but not at the level at which they qualify for special seminars used to reward and recognize star producers.

For instance, PaineWebber's new Investment Management Consultant Program is aimed at reps the firm describes as "pre-Pacesetter." To be a Pacesetter, a broker has to have at least $440,000 in gross production and a minimum of five years in the business.

Giles says his understanding is that the program is aimed at "the people in the $250,000 to $350,000 group, the people they want to upgrade to the half-million mark."

PaineWebber says its program fills a training gap. Mid-level producers "really were not getting their fair share," says Barbara Brooks, director of PaineWebber's educational programs.

Likewise, Dean Witter's new "mid-tier producer" program, started in 1995, initially defined mid-tier as being within the range of $250,000 to $500,000, though it's since removed that ceiling, a firm spokesperson says. "Dean Witter has been training people for over 50 years, but we conducted a needs analysis and found that gap in our training," the spokesperson says.

Prudential, however, defines mid-level "mainly by length of service," says Richard Franchella, the firm's national sales manager. Brokers who are invited by their managers to be part of its new Masters Series Program have to be in the business for at least three years, and the program "isn't a fit for every single FA [financial adviser] in the system," Franchella says. "We're trying to pick those folks who have a very high level of business growth." That can include not just the younger brokers, but people with many years of experience as well.

PaineWebber has no service requirement, either, for its mid-career training programs. But Brooks says brokers there are required to have "enough experience in the business to benefit," and the firm "prefers people who have the potential to grow their business."

Meanwhile, Merrill Lynch has always done training at the mid-level, according to Andrew Williams, the firm's first vice president for advanced technology and training solutions. And Merrill is planning to boost its training for any rep who's been with the firm for more than two years by doing more training via the firm's new Trusted Global Advisor workstation. The addition of the electronic component should increase the number of programs by about 50%, Williams says, adding that many of the computer-based programs should meet the continuing education requirements.

No Product Pushing Brokers find the continuing education programs refreshingly different from the norm because there is no sales or product pitch.

Barbara Jaffe, a million-dollar-plus producer with Prudential Securities in Jacksonville, Fla., went to Prudential's new program in Houston last September. Even though she's been in the business for 19 years, "I had never participated in anything like this before. Usually, when you go to any kind of meeting, there's something they want you to sell, but that wasn't the case here. There was no sales pitch, which had a lot of appeal to me."

Jaffe describes the speakers as "three days of the best of the industry" and "one star after another; any one of the speakers could have been a keynote, as opposed to being just one of many," she says, citing Jeremy Siegel, the author of "Stocks for the Long Run," as one example.

There were also breakout sessions on subjects such as advanced estate planning where "we talked about the implications of the new tax laws and how they will affect my clients. But it was more for my understanding, for me to be in a position of having a lot more knowledge, than to go sell something," Jaffe says.

It's not that this has been an easy task for the firms to accomplish. When the firm element of the NASDR's continuing education program went into effect on Jan. 1, 1996, it was designed to be as flexible as possible, to take into account the different needs of different people based on a needs analysis.

That vagueness has forced firms to do some serious thinking of their own. One of the things they've decided is that ongoing training programs have to be both highly interactive and highly customized to lure the established broker who's loath to take two or three days out of the office.

"Adults learn by doing," says Brooks. Therefore, PaineWebber teaches concepts in the morning, and then directly applies them in the afternoon through computer simulations that show how decisions affect a portfolio, she says. Giles confirms that "The computer simulation really makes the program fun."

Each of Prudential's attendees fills out a "gap map," Franchella says. "Under every course description, we ask them to rate the importance of a business activity and their competency in that area." Reps then can choose the best courses for their own needs, he says.

PaineWebber did its second session on fixed income last fall, and in the first quarter, it will also offer the same group of 1,000 brokers a third segment on equities. In the second quarter, there will be a fourth and last seminar on asset allocation and portfolio management.

Dean Witter currently is offering two seminars a year in each of its seven regions. The two-day seminars include topics like business analysis, compliance and legal training, and selling skills. The sessions typically are limited to about 40 people apiece, but in the course of a year, roughly 600 brokers will attend, the firm says.

Prudential already has scheduled a second offering of its Masters program for April, and it will be offered again in the fall.

Take all of these statistics together, and it means a fair number of brokers either have received, or will be getting, a level of education that was previously unavailable to mid-level reps. The fact that firms have succeeded in taking a regulatory requirement and turning it into something their brokers actually enjoy and find valuable--to the point of being unaware that it is a regulatory requirement--shows the industry may be on to something.

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