Prudential Securities President Jamie Price wants reps to concentrate on larger accounts.
Price is telling brokers in road shows that half of the firm's accounts are $25,000 or less, and they represent approximately 3% to 4% of the firm's revenue, according to a Prudential rep in Southern California. The message is that small accounts create too many costs, and the reps need to do something about it.
Several Prudential reps say Price is considering changes to the compensation plan whereby accounts of less than $25,000 would not count toward bonus levels.
A Prudential spokesperson says the firm hasn't decided what it might do. “It's not official by any means,” she says. “I don't even know if we'll implement this at all.”
Broker reaction is mixed. “I have a lot of accounts less than $25,000,” says a producer in Northern California. “So I think it [would be] a bad deal.”
However, a Texas-based broker sees the benefit long term. “Smaller accounts tend to take up the majority of our time,” he says. “It allows you to tell people, ‘Sorry, I can't open that kind of account,’ and be telling the truth. … If [the firm] were raising the minimum to $100,000, it'd be a problem.”
“Basically, if you want to deal with the affluent — and this firm does — you have to draw a line in the sand somewhere,” says the Southern California broker.