Sometimes it’s best to start from scratch.

That’s exactly what Santander Bank decided to do with the brokerage program it took over from Sovereign Bank when it bought Sovereign in 2009. Santander brought the program in-house, which for years had been with LPL, and moved quickly to build its own compliance, product management and operations departments.

While the bank brokerage program went through the normal “growing pains” of setting up the teams and the right processes, it was well worth the effort, said Fernando Batlle, head of Santander Securities, the retail brokerage business of Santander Bank, the Boston-based subsidiary of global banking giant Santander Group. In the first quarter of 2014, revenue from the business grew 27% year-over-year, beating peer banks, such as PNC, Huntington and Citizens, which grew an average of 11%, Battle said, citing the Cramer + Associates Q1 2014 Revenue Benchmarking Survey.

“We are No. 1 in terms of growth among our peer group,” he said.

Indeed, the program shows great promise, according to recruiters. Even though Santander Securities is in its infancy in the United States, it’s on its way to being a “phenomenal organization,” said Rob Blevins, president of Rowlette Executive Search, a recruiting and consulting firm focused on the brokerage industry. “They’ve gotten good leaders in place. They definitely got the backing of senior-level management to grow,” he said.

The broker-dealer is making a big push in the Northeast in a bid to capture mass-affluent customers with assets between $100,000 and $3 million, said Batlle. As part of that effort, he plans to ramp up the number of advisors to 275, from the roughly 187 the unit has now, and double assets under management to $15 billion by the end of 2016.

While ambitious, Batlle believes the goals are achievable given the quality of the program he and the bank have put together. In addition to training, the program offers one of the most competitive incentive compensation plans in the industry, Batlle said. That, combined with the global resources and brand name recognition of Santander as well as referrals from the retail branch network, will help attract the advisors he needs to grow the program, he said.

“It’s good to hear that Santander is going to make some changes,” commented Rick Rummage, founder of the consulting firm Rummage Group. “Sovereign Bank was not known for its brokerage program.”

To attract advisors and boost the program’s profile, Santander assessed the comp plans offered at rival banks and bumped up the grid in ranges where it sought to be more competitive. For example, a $600,000 producer would get a 40% payout, Batlle said.

“I would say Fernando’s program and Santander’s is right there, maybe a percentage or two ahead of most of the others,” said Blevins. Blevins added that Santander’s program accelerates comp payouts for managed money and fee-based business, a reflection of the program’s “holistic, service-oriented model.”

In fact, Santander is treating its brokerage program as would banks with larger, more developed programs, Blevins said. “Their behavior is not typical of a bank with only 700 branches,” he said, explaining that banks like Santander tend to be volume and product-driven, selling annuities, mutual funds and the like. Banks of Santander’s size, he went on, are not usually looking for managed money, fee-based business or long-term recurring revenue, as Santander is trying to do. “That’s usually reserved more for the Wells Fargos, the Citibanks and the SunTrusts that have more evolved programs,” he said.

Santander is mimicking the bigger players in other ways, most notably by insourcing the broker-dealer function, despite a general trend in the industry to outsource the business. Santander did so to control and better manage every aspect of the client relationship, Batlle said. It also allowed the bank to gain complete control of the business without diluting the power of their global brand.

“It was always our plan to eventually take the broker-dealer function in-house. This is consistent with Santander’s global strategy and how we conduct business in the geographic markets in which we are present around the world,” Battle said. In addition, the bank has the size and economies of scale to take on the attendant technology, compliance and other costs and risks that go with running a broker-dealer, he said.

Already, the program is on track to have ten $1 million-plus producers by year-end, a fact that Blevins attributes to the changes the bank has made, including its switch to Envestnet as its managed money platform. Blevins noted that the program will soon allow advisors to solicit fixed income, something that they were not allowed to do before Santander took over Sovereign. Under the Sovereign program, advisors could only sell fixed income on a non-solicited basis, Blevins explained.  With this and other changes, Blevins says he wouldn’t be surprised if 20 producers had over $1 million within a year.

“I think Santander over the next five to 10 years is going to give the other big bank programs a run for their money in the industry. It wouldn’t surprise me to see them leading the pack,” Blevins said.

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