The newly appointed chief of First Union Corp.'s brokerage wants nothing short of national recognition for his operation.
Daniel J. Ludeman said he sees First Union Securities Brokerage Corp. surpassing well-known names such as Prudential Securities and Citigroup Inc.'s Salomon Smith Barney unit to become the third-largest brokerage in the nation, based on number of brokers, in three to five years.
"Given our growth prospects, that's where we think we'll end up," Mr. Ludeman said.
First Union's brokerage operation is ranked sixth, with 6,300 registered representatives in 41 states gathered from its own ranks and the acquisitions of Wheat First Butcher Singer Inc. in 1998 and Everen Capital Corp. this fall.
Mr. Ludeman declined to discuss the possibility of more acquisitions as a way of reaching his goals, but the company has said in a regulatory filing that it is on the lookout for opportunities.
A former Wheat First executive, Mr. Ludeman, 43, was named chief executive of the brokerage this month, succeeding James R. Boris, 55, who retired.
But combining the systems of two large brokerage operations can be costly.
First Union disclosed in a regulatory finding Nov. 15 that it would take a $60 million charge because of the Everen acquisition. The charge covers the costs of converting technology, combining offices, and other organizational matters, a spokeswoman said.
Stephen Biggar, a banking analyst at Standard & Poor's Equity Group, said the charge did not seem unusually high.
The brokerage operation faces competition from firms entrenched in the business, said Marni Pont O'Doherty of Keefe, Bruyette & Woods Inc.
"It's a very competitive business," she said, and adding brokers does not necessarily guarantee success. "They face all sorts of pressures from on-line brokerages and companies that already have a national name." First Union's challenge is to "cement a brand name across the country," she added.
Mr. Ludeman said the brokerage plans to attract investors with its broad product array, which includes both First Union proprietary mutual funds and the products of other fund and securities companies.
First Union also uses its flexibility as a draw, offering customers varying ways to pay commissions on assets -- either a one-time charge or periodic fees based on the total of assets under management.
The brokerage has continued stepping up its selling efforts, Mr. Ludeman said, citing a 40% productivity increase by Wheat First brokers who came over after the merger.
He said First Union's approach to the business makes it clear that customers' best interests are always being served. "The client's interests come first, and the client belongs to the broker, not the firm," he said. "We want to create and foster an entrepreneurial environment where we provide the best customized advice."
