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Prudential Responds to "Chip Off the Old Rock" Article


The July issue of Registered Rep. magazine features a story entitled "Chip Off the Old Rock" which suggests Prudential Securities brokers are having an especially troublesome time in these difficult market conditions. We believe Prudential's story is much more positive as demonstrated by the following facts:

"All wirehouses are suffering...but Prudential Securities may be hurting most." And later in the story "...many Pru brokers are struggling with increased production goals..."

Our Financial Advisor productivity remains high and continues to improve while productivity at other firms has declined as reported by McLagan.

"Prudential Financial's brokerage arm lost $19 million in the first quarter..."

Prudential Securities does not report earnings as a standalone unit and as such it is inaccurate to equate Private Client Group losses with Prudential Securities losses. However, comparing Private Client Group losses quarter to quarter, the story did not report that the Private Client Group has significantly reduced losses, down from $79 million (including $21 million of restructuring charges) in the fourth quarter of 2001 to $19 million in the first quarter of 2002 as reported publicly in Prudential Financial's quarterly earnings announcements.

"They're downsizing with the full intent of being a firm of about 2,500 to 3,000 brokers, max," says a recruiter. "And they're trying to get everybody doing nothing but managed money."

We are not drastically downsizing our sales force, nor have we ever planned to release the bottom quintile producers, an assertion made elsewhere in the story and, erroneously, attributed to me from an interview with your magazine from last January.

The statement we are moving to doing "nothing but managed money" is at odds with our stated objective of fifty percent recurring revenue and fifty percent transactional business, which your magazine reported in its February 2002 issue.

"(A core broker is) likely someone who averages around a reported firm goal of $600,000 in annual production."

Core financial advisors are defined as producers in the top three quintiles or those with production greater than $300,000, a much more inclusive number.

"Brokers at several offices around the country say talent is being cherry-picked by other firms..."

Our year-to-date annualized attrition rate of Core financial advisors going to our competitors is exceptionally low.

In short, we believe the assertion by your magazine that our brokers are faring worse than others in the current market environment is misleading.

Jamie Price, president
Prudential Securities
Prudential Financial
New York

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