PNC Financial Services Group Inc.'s wealth management business plans a hiring blitz to build on the Pittsburgh banking company's $5 billion acquisition of National City Corp. of Cleveland in December.
The goal is to add around 350 advisers over the next several months, according to Michael Mortensen, the president of PNC Investments.
"We have the opportunity to grow our sales force close to 1,000 financial advisers and 1,500 licensed bankers," he said in an interview. "It's a huge opportunity for us."
The idea is to boost National City's adviser coverage to the same level as PNC's, Mortensen said.
National City has traditionally relied heavily on licensed bankers to sell investments, while PNC's model is more adviser-centered, noted Kenneth Kehrer, the director of the research firm Kehrer-Limra. PNC has 400 licensed bankers and National City has 1,000, he said. PNC's brokerage operation had $18 billion of assets under management at the end of 2008. "Nat City," Mortensen said, "was a bit behind us in terms of their penetration rate, so there is a lot of upside there."
Kehrer said Mortensen "clearly understands he needs good adviser coverage. That is one of the best levers he has to maximize the operation of brokerage working within a bank."
In February, Mortensen said the hiring market was strong and PNC hired 40 advisers last year. Many bank executives have reported that the market is awash with talent as big brokerage houses lose advisers and brokers. Citigroup Inc.'s Smith Barney and Merrill Lynch, now a unit of Bank of America Corp., are among the firms that have been losing or laying off brokers and advisers.
Kehrer, however, said PNC could struggle to add hundreds of positions. "Is an adviser more apt to move in difficult times, or to stay put and hang on to what he's got?" he said.
The Dec. 31 purchase of Nat City brought PNC Investments into new markets and added scale that "will allow us to do things from a product and tech standpoint that we might not have been able to afford before," Mortensen said.
PNC Investments may make changes to its operating platform, clearing relationships and other areas, he said. The added scale will allow it to become more efficient and offer new products in lines such as retirement, he said.
It will take more than a year for the combined operations to have a single clearing facility, a unified operating platform, a single set of products and one compensation plan, Mortensen said. "It will be mid-2010 before we really look and feel the same across the entire footprint," he said.
As for PNC Investments' performance, 2009 should end with "some growth certainly," but probably not the double-digit variety that is the norm, Mortensen said.
PNC Investments has had a compound annual growth rate of more than 13% since 1994, he said.
Last year's were skewed by PNC's March sale of its Louisville brokerage firm, J.J.B. Hilliard, W.L. Lyons Inc., which had more than 1,000 employees at 76 branches. PNC's securities brokerage income fell 42.7% in 2008, to $120.3 million, according to Michael White Associates' Fee Income Ratings Reports.
PNC's annuity commissions and fees rose 1.5% in 2008, to $69.5 million, according to White Associates.
Mortensen credits PNC Investments' long run of success to the backing of the parent company's top executives. PNC is keen on fee businesses; before it bought Nat City, more than half of its revenue came from fees rather than interest rate spreads.
Since the brokerage operation is a large source of fees, top management is "very supportive of us," he said.
That translates into a budget with room for things like a team of coaches who work with financial advisers.