Looking to fill a growing need for advisers for its brokerage business at a reasonable cost, PNC Financial Services Group Inc. has been training promising candidates in-house, in a departure from standard bank practice.

"We do think the [brokerage] industry really has very few places where people can enter it," said Mike Mortensen, president of PNC Investments. "Right at the time baby boomers are retiring and demand for advice is rising, there are not enough qualified people out there to serve them."

PNC started its first adviser development class in April; a second class has since been added. The company plans to train three to four groups a year in staggered fashion, Mortensen said. The curriculum includes training, licensing, mentoring by existing advisers and a rotation through areas such as the call center and operations businesses.

PNC is one of the first banks to offer such training, which is more common at wire houses and regional brokerage firms.

Training crops of advisers is a good way to avoid the high costs of luring established brokers in a competitive market, said Michael White, president of Michael White Associates in Radnor, Pa. "Given some of the recruiting bonuses that have gone on to get top names, that gets pretty expensive," he said.

It's true that newly minted advisers will start without the hefty books of business that established brokers can bring. But they are likely to remain more loyal, and PNC can rest assured that they are well trained, White said.

Few banks are likely to follow PNC's lead in training brokers because they lack PNC's resources, he added.

Plans call for graduating 100 to 200 students a year. Trainees are recruited from many quarters, according to Mortensen. They range from military veterans to sales veterans in nonfinancial fields to licensed bankers within PNC. The bank is looking for candidates from their mid 20s to their late 40s. "It's not something we're out recruiting in colleges for," Mortensen said. "It takes some seasoning."

The training comes as PNC is looking to build its broker force substantially. Since the bank bought National City Corp. for $5 billion in late 2008, it has hired 200 financial advisers in an effort to scale up the legacy National City brokerage program, Mortensen said.

Legacy National City's adviser coverage lags PNC's because the former had traditionally relied more heavily on licensed bankers to sell investments.

There are lots more positions to be filled, Mortensen said. PNC has about 2,500 bank branches, and wants an adviser for every two branches. With its current total of 750 brokers, that means adding 400 to 500, he said. What's more, PNC Investments is planning for organic growth that could "easily" justify enlarging its broker corps to 1,300 or 1,400 within the new few years, Mortensen said. "We think we have a lot of untapped potential internally," he said.

PNC already has one of the most successful bank investment programs. In the first quarter, its holding company reported $57 million of mutual fund and annuity income, 11th best among 310 bank-holding company rivals, according to Michael White Associates' Fee Income Ratings Report.

There is a risk to becoming an adviser factory: PNC could become a target for poaching, as other large brokerage organizations have been in the past. Mortensen said he is not worried that PNC's advisers will be tempted to stray.

"My goal is to create an environment where people are going to be more successful here than anywhere else," he said. "I think we do a better job of training and supporting our financial advisers than just about any of our competitors."

The training program is one of several PNC initiatives in the wake of its deal for National City. Among them is the conversion of its three legacy clearing platforms, a huge job that is to be completed in June 2011. "We really need to get one platform so we can have the same customer and employee experience," Mortensen said.

PNC picked a new clearing provider, Fidelity Investments' National Financial Services LLC, to provide all its service. Mortensen said National Financial is "one of the Cadillac providers out there."

"We are a large firm at this point, so the universe of folks we could look at was not that large," he said. "They were incredibly competitive from a price standpoint, and they are continuously investing many millions of dollars in their platform to make it state-of-the-art."

Clearing platforms are the backbone of brokerage businesses; they do everything from processing trades and managing custody to keeping customer records and generating statements.

Register or login for access to this item and much more

All Bank Investment Consultant content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access