From the May 2007 issue of Research Magazine • Subscribe!

Wachovia's New Bonus Makes Customer King

Wachovia Securities gave its 8,000 advisors a new "lucky" incentive for expanding their fee-based business on March 13: the "4front" bonus plan, which aims to reward FAs for inspiring customer satisfaction and loyalty, a key goal of Wachovia Corporation and its branding efforts.

"Beginning in 2006, we decided to put a fair amount of effort into understanding how client loyalty is the primary driver in the affluent marketplace," says David Monday, chief growth and productivity officer. What stood out, according to Monday, were the importance of having a financial plan with reasonable goals, working with an advisor to monitor progress in reaching the goals, and seeing that the advisor cared by his frequent, personal contact. "We heard it over and over in focus groups," Monday adds.

The new client-inspired bonuses focus on households in which 60 percent of assets under management are in a fee-based platform; the minimum level of assets is $250,000. For such households, advisors are expected to develop an investment plan using Envision (the firm's planning software), contact clients six or more times a year, and score high on most criteria in a voluntary customer-satisfaction survey. FAs must also complete yearly training in client service and loyalty.

In addition to their traditional productivity bonuses, the new plan offers FAs with 150 households the chance to earn up to $100,000 per year and a total of $1 million over time. The $100,000 award will come to those bringing in at least $10 million in net new assets in a 12-month period and with $10 million in loan balances.

The firm is also offering one-time bonuses of up to $100,000 to advisors with 100 households and $10 million in new assets, $50,000 to those advisors with 50 households and $6 million in new assets and up to $25,000 for those with 25 households and $3 million in new AUM.

To obtain these bonuses, Wachovia executives say, advisors must raise their AUM via new households or by providing more services to existing households. The awards are paid as deferred compensation and vest over six years.

"Very few clients have contact with an advisor six times a year, have a plan in place and are not loyal," explains Monday.

"We expect significant participation, though there is a level of effort required to going through this," he shares. "Client loyalty is hard work. We are not saying it's easy, but we are saying it's worth it."

Training in the new loyalty program began in March and client surveys for 4front are now ongoing. The first $100,000 4front bonus should be rewarded in July 2008. "We've talked about it for a year now, and people are very excited," Monday concludes.

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Wachovia's 4Front

o New client-service, loyalty bonus

o Awards of $25,000-$1 million

o Linked to households using fee-based advisory programs, net new asset growth and loans balances

o FAs must receive high marks from clients in annual surveys, meet with clients 6-12 times a year to assess progress in reaching financial plan/goals

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Major Market Push Continues

Wachovia continued a Sacramento, Calif.-based tradition, celebrating the annual "College of Financial Knowledge" on a Saturday in mid-February.

According to Rod Smyth, Wachovia Securities' chief investment strategist who spoke at the event, the educational community gathering is the biggest "major market" event that he speaks at all year nationwide. Over 1,000 people attended, with the aim of better understanding how investing works and how it applies to them. Attendees were cross-generational, Smyth and other Wachovia guests say, demonstrating how investment planning has become a "family affair." Many women were there as well.

Wachovia has set up a new website for women to access information on retirement and other financial-planning topics (www.wachovia.com/women) and offers FAs gender training to better address the needs of this market segment.

In its latest Retirement Fitness survey, Wachovia has found that consumers feel better about their readiness though they have not necessarily taken more steps to be truly prepared. Some 58 percent of women feel worried about their financial preparation for retirement and 61 percent say they face uncertainty.

Events like the free day-long gathering in Sacramento aim to address such concerns. The event included a talk by Todd Buchholz, a former White House policy advisor, and Smyth. The host was Steve Stahlberg, Wachovia's Sacramento market manager.

Wachovia is in the process of identifying its largest 40 markets nationwide, with 26 being identified so far.

In its Boston market, Wachovia recently tapped James Connors to serve as head of 12 offices in the area. Connors has been manager of a branch complex in the area. He is expected to oversee offices in Massachusetts, as well as in Rhode Island, New Hampshire, Maine and Vermont.

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Janet Levaux is the managing editor of Research; reach her at jlevaux@researchmag.com.

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