Quick & Reilly has hit some snags in trying to shed its discount brokerage skin roughly 25% of its reps have left this year.
Still, Donald E. Froude, who is president of the FleetBoston Financial Corp. unit, says Q&R is making progress in its transition to a full-service wealth management strategy.
Mr. Froude says that the exodus has not cost the company customers, but that he does not know whether those of SureTrade, the online deep-discount brokerage it absorbed this month, will be willing to pay slightly more for Quick & Reillys additional services.
Mr. Froude, who arrived at Quick & Reilly last May, began shifting the New York firm from its discount house roots to a more full-service model in January. He said he replaced some of the transaction-oriented brokers who left with new hires who are more relationship-oriented.
Part of the reason he has been able to get those hires, he said, is because of changes in the firms payout structure, which gives reps more incentive to create ongoing client relationships that are not based on transaction activity.
A largely straight-commission system has been replaced by one involving salary, commission, and bonuses tied to the number of new accounts a rep brings in, a spokesman said. Now a brokers total compensation can be as much as 40% of the face value of products the broker sells, Mr. Froude said, while at the Bank Financial Analysts Association conference last week.
And these high payouts are giving the firm an unexpected benefit, despite the deepening bear market: Mr. Froude said he recruited reps from Citigroup Inc. and Morgan Stanley Dean Witter & Co.
He said he expects to have a full complement of 1,000 reps again before yearend, including brokers from three-year-old SureTrade and Summit Bancorp of Princeton, N.J., which FleetBoston Financial Corp., Quick & Reillys parent, bought March 1.
In an interview with American Banker, Mr. Froude said building a brokerage based more on deep customer relationships than high transaction volume is requiring him to change the very root of Quick & Reillys culture.
Quick & Reilly was historically taking orders all day long, Mr. Froude said. Brokers had very little time to deepen their relationships with their clients.
Brokers who formerly focused on generating transactions must now learn to massage the client, he said. Taking the time to develop lasting relationships with clients will give reps a higher retention rate to compensate for smaller sales volume, he said.
Summits reps will give Quick & Reilly broader access to the demographic it seeks, he said: customers with between $150,000 and $1 million of investable assets and household income of at least $75,000. Summits geographic area has the countrys highest concentration of this sort of client, he said.
Mr. Froude said he is specifically looking for brokers who have between one and three years of experience, are looking to build a book of clients, and have a soft touch when it comes to dealing with their clients.
For reps interested in creating ongoing relationships, Quick & Reilly has been bringing out products that create recurring income, such as managed and separate accounts. In October the company introduced a managed asset account, its first product to create recurring income in the form of monthly fees, and the company says that more managed and separate accounts will be launched this month.
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