Wachovia launches 4front client loyalty program

IRVINE, Calif. — In an expected move, Wachovia Securities LLC this month launched a client loyalty program called 4front.
The program offers one-time deferred bonuses of up to $100,000 for brokers who meet certain thresholds.
Wachovia describes the program as an effort to build client loyalty.
“We’re the first [firm] to have something this dramatic built around client loyalty and satisfaction,” said David Monday, chief growth and productivity officer for Richmond, Va.-based Wachovia Securities.
“It’s not a bad package,” said a Wachovia rep in Southern California, who asked not to be identified.
“It’s an effort at broker retention.”
Mr. Monday said that 4front is based on investor research showing that client satisfaction requires having a retirement plan in place, frequent adviser contact and the use of an advisory account.
The program has been in the works for some time, he said. The final version isn’t appreciably different from what reps expected (InvestmentNews, Feb. 5).
Qualifying households
Wachovia’s brokers this year can qualify for the one-time “client service and loyalty” awards if they have a certain number of households with $250,000 or more in assets.
These qualifying households must also bring in net new money, must be enrolled in the firm’s Envision retirement-planning service and have at least 60% of their assets in fee-based advisory accounts.
Representatives must also commit to at least six customer contacts per year, including an in-person meeting. In addition, client surveys must show that the qualifying accounts are satisfied.
Households with $1 million or more in assets don’t have to meet the 60%-fee-based requirement.
Depending on the thresholds reached, brokers can qualify for a $25,000, $50,000 or $100,000 bonus that vests in six years.
The requirements for the $25,000 bonus are 25 $250,000 households and $3 million in net new money from qualifying accounts.
Reps with 50 qualifying households and $6 million in net new money will earn an award of $50,000, and those with 100 4front households and $10 million in net new assets get the top award of $100,000.
Brokers must qualify individually for the awards.
Beginning next year, brokers can get an annual award of $100,000 — up to a total of $1 million — by having 150 qualifying households that bring in $10 million of net new assets and have $10 million in mortgages or lines of credit through Wachovia.
Fee-based brokerage accounts and mutual funds don’t count as advisory business under the program.
That omission is a drawback for some reps, but Mr. Monday said the firm thinks that true advisory accounts are more effective at building loyalty.
If you’re a retiree, it is desirable to know that “someone is handling things for you,” he said.
Some grumbling
A Wachovia broker in Northern California, who asked not to be identified, said he might have trouble meeting the 60%-fee-based requirement, because his clients hold large amounts of individual bonds.
The minimum $3 million in net new money is also an ambitious target. Wachovia doesn’t disclose its net new asset flows, but competitors have been bringing in less than $3 million in net new assets per broker.
“I don’t think it’s so ambitious if [a firm is] really focusing on a key relationship and service model,” Mr. Monday said.
Some Wachovia reps grumbled that the new plan goes against the company’s culture of avoiding any kind of product pushing.
But Mr. Monday said that 4front is voluntary.
“If [our financial advisers] don’t want to adopt this business model, that’s fine; we don’t take anything away from them,” he said.