MINNEAPOLIS - John S. McCune learned to size up the competition as a youngster in Grand Island, Neb. As a newspaper delivery boy for the Omaha World-Herald, he would snatch subscriptions from other carriers' routes.

"I'd find out who the slackers were, and I'd go around their part of the neighborhood picking up subscriptions," Mr. McCune says. "That's where I learned I had a knack for selling."

Now he puts those instincts to work as president of Norwest Investment Services. The brokerage subsidiary of Norwest Corp. is sharply focused on the competition, whether from banks, regional brokerage firms, or national players like A.G. Edwards & Sons or Edward D. Jones & Co.

"We have the same goal as an Edward D. Jones," says Mr. McCune in an interview at Norwest's Minneapolis headquarters. "We expect sales, we expect volume, and we want it done the right way."

Understanding the competition - and knowing how to reach Norwest customers before a rival brokerage firm gets hold of them - has helped Norwest Investment Services achieve a firm foothold in small towns across the Midwest.

Between 4% and 5% of Norwest's customers now use the company's investment services. Mr. McCune, who says 75% of the bank's customers own investments of some sort, is determined to boost market penetration to 15% within three or four years.

To do that, he intends to quadruple his sales force to 1,000 brokers by 1999. Currently, Norwest Investment Services has offices in 154 bank branches in 15 states and employs 234 stockbrokers.

Much of the sales infrastructure has been built up by Mr. McCune, 50, who became president of the investment services unit in 1991.

Mr. McCune gets into the office about 7 o'clock each morning, and his first order of business isn't a cup of coffee and a newspaper.

Instead, he is hovering over his brokers' shoulders, quizzing them about the morning's market activity.

"If everyone is yelling and screaming, then I know business is good," he says.

At first glance it may seem as if Mr. McCune's routine hasn't changed much since he started at Norwest's bond desk 18 years ago. He cut his teeth trading and underwriting municipal bonds for Norwest's Omaha bank subsidiary.

The bond business is still a big part of Norwest Investment Services, which ranks among the country's top 100 underwriters of municipal bonds.

But increasingly, retail brokerage is the mainstay. Today, this business accounts for 70% of the unit's income, with securities underwriting making up the balance, Mr. McCune said. Five years ago, those figures were reversed.

"They know their customers really well and have designed good investment products for their markets," says Geoffrey Bobroff, an investment-products consultant in East Greenwich, R.I. "It's a bank that has been committed to the business.

"While a lot of other banks have had some stress and strain in their investment units, and have undergone reorganizations, Norwest has kept its knitting together," Mr. Bobroff says.

Taking a page from brokerages like Jones, Mr. McCune is thinking of deploying Norwest brokers in markets according to how much total investable assets are in an area, not simply the assets a bank holds in a particular market.

He says he doesn't tolerate brokers who sit in an office and "wait for business to walk through the door just because you work for a bank."

"I want people who aren't afraid to pick up a phone and call customers," he says.

But lately the brokerage has experienced some growing pains as it has tried to integrate various investment programs the banking company inherited from a bank acquisition spree this year.

Part of the problem stems from Norwest's use of full-fledged stockbrokers instead of sales reps, who require less training but can only sell a limited range of investment products.

"I can't find enough qualified people to fill these positions," Mr. McCune says. "You cannot be competitive in this market with part-time investment people."

Now the brokerage chief is going ahead with a program aimed at boosting recruitment, retaining brokers, and developing new products and services at Norwest Investment.

While the brokerage has not had any problems retaining brokers, Mr. McCune says he's headed off problems by regularly reviewing compensation levels to keep them competitive.

The bank is also planning to unveil an asset-allocation account in January in response to competitors that have had their own products on the market for quite some time. The account will include the proprietary Norwest Funds as well as portfolios from Putnam Investments, Federated Investors, and Fidelity Investments.

"Ten years from now we'll be making most of our money from asset management - mutual funds, trust, and wrap accounts," Mr. McCune says.

Richard Kovacevich, the banking company's chief executive, says he expects the brokerage, trust, and insurance units to represent 25% of Norwest's bottom line by the end of the '90s. These businesses now bring in about 11% of revenue, or $14.7 million in the second quarter.

Unlike many bank brokerages, which are often run from bank trust departments or subsidiaries, Norwest's retail investment services work under the banking company's Section 20 subsidiary, which allows it to underwrite securities.

The brokerage gets about 10% of its revenue from its municipal bond underwriting activities. And despite the hard times the bond market has gone through, Mr. McCune says Norwest is committed to underwriting more municipal debt because of the exposure the bank gets in the community.

Mr. McCune recounted the story of a recent bond deal for the school board of Winner, S.D., where Norwest had just acquired a bank but had run up against a citizenry that wasn't familiar with the company's name.

"After we did that small $3 million bond deal, it really opened the door for us" to do more institutional and individual investment business, Mr. McCune says. "This is business that a player like Goldman Sachs will never look at, but it's gold to us and if we don't serve the community, then who will?"

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