Lowering the Keeper Threshold

Wachovia's former Pru brokers can hand on to smaller accounts, provided they continue to cast for the big fish.

The Pru-Wachovia merger has resulted in at least one positive (if small) change for former Pru brokers. They are no longer required to forward smaller accounts — defined as those with assets below $25,000 — to the company's call center.

The forwarding policy, part of an effort to free advisors to focus on upriver clients, was a legacy of the old Pru. But sources say Wachovia has agreed to let advisors retain the smaller accounts if they feel it is advantageous.

“That was a bone of contention ever since the initial merger happened,” says a Wachovia broker who worked at Pru before the combination of the two firms. The issue, unsurprisingly, centers on compensation issues: Commissions on the forwarded smaller accounts were withheld from the brokers who brought in the business. That fact, combined with regional quotas for accounts that needed to be moved to the call center, made advisors feel as though they were being forced to give away portions of their compensation.

But a Wachovia spokesman confirmed that the small-account restrictions have been reversed, and advisors are now free to “rely on their judgment to determine the best way to serve their clients.”

Reps applauded the move as a vote of confidence in their ability to size up a client's potential. “Sometimes, you know the guy you've got a $5,000 trading account with has $1 million in his 401(k),” one advisor says. “That's why you put up with the $5,000 trading account.”

Wachovia has handled this issue as it has other merger-related issues: in a measured, low-key manner. The firm recently released ads discussing the marketing implications of the merger (Pru has technically become “a division of Wachovia Securities”). And the payout grid is under review. But generally, the deal has proceeded quietly and efficiently.

Of course, there are no guarantees that things will remain this calm. Some observers expect the New York-centric Pru to have problems assimilating into Wachovia's decidedly regional culture. But so far, so good. A recent exec roadshow recieved less-than-stellar reviews, but reps were treated to trips to Richmond, which were well thought of.

The merger officially closed in July, creating a firm with over 12,000 brokers, 8,000 of whom are Series 7 registered reps. The “new” Wachovia had $532 billion in client assets and about 3,400 locations as of March 31.

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