1st Union Relies on Platform Sales in Northeast

Making a play to expand its brokerage operations into the Northeast, First Union Corp. has begun using platform workers in newly acquired branches to sell mutual funds and annuities.

The Charlotte, N.C.-based banking company completed its acquisition of First Fidelity Bancorp. in December and announced last week that it had begun selling investments in its 680 new northeastern branches. The former First Fidelity branches are in Connecticut, Maryland, New Jersey, and New York.

"The early results have been positive," said Donald A. McMullen Jr., chief executive of First Union Capital Management. "Now that we have the products in place, we plan to get the word out through our branch personnel."

The new sales force comprises 984 branch employees who have been trained and licensed to sell funds or annuities and another 100 full-service brokers who can sell a broader range of investments, such as individual stocks and bonds.

First Union's strategy has been to blanket its markets with as many sales representatives as it can muster. Indeed, the company has doubled its sales force during the past year, to more than 2,900 investment reps, most of whom will be platform employees.

Other banking companies, including Huntington Bancshares and U.S. Bancorp, have built the sale of investment products around branch workers. First Union's program is seen as one of the most aggressive.

Some observers say, however, that a dependence on platform salespeople - who meet much less rigorous licensing requirements than full-time brokers - has its drawbacks.

"Most people wouldn't want to go to a part-time doctor. So why would they be better served by a person that does investment planning or selling on a part-time basis?" asked Roger Thomas, a Columbus, Mo.-based consultant.

Mr. Thomas said most platform reps have a hard time switching gears from traditional bank services and products to pitching investments. Sales from the bank platform, he added, are often just one-time transactions that do little to deepen the customer's relationship with the bank. "You're not going to gain more wallet share from part-time reps," he said.

But the strategy does allow banks to expand their investment sales programs more quickly and cheaply.

Platform reps often need only a few months of training to pass the Series 6 examination from the National Association of Securities Dealers, allowing them to sell mutual funds and annuities. And these salespeople get only a small percentage, if any, of the sales commission full-service brokers demand.

"It can be a great way to cover a wide area," said Carolyn Spitz, a senior consultant at Spectrem Group in San Francisco. "Because of their sheer number, they can do a lot of business."

First Union officials would not disclose the investment sales volume projected for their northeastern bank branches this year.

Anthony Saponaro, First Union's retail investment sales director for the Northeast, said the company would focus on licensing more employees to sell mutual funds. Right now, only 42% of the region's sales force is licensed to do so.

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