Filed by First Union Corporation
Pursuant to Rule 425 under the Securities
Act of 1933 and deemed filed pursuant to
Rule 14a-12 under the Securities Exchange
Act of 1934
Subject Company: Wachovia Corporation
Commission File No. 333-59616
Date: June 27, 2001
This filing contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements include,
but are not limited to, (i) statements about the benefits of the merger between
First Union Corporation and Wachovia Corporation, including future financial and
operating results, cost savings, enhanced revenues, and accretion to reported
earnings that may be realized from the merger; (ii) statements with respect to
First Union's and Wachovia's plans, objectives, expectations and intentions and
other statements that are not historical facts; and (iii) other statements
identified by words such as "believes", "expects", "anticipates", "estimates",
"intends", "plans", "targets", "projects" and similar expressions. These
statements are based upon the current beliefs and expectations of First Union's
and Wachovia's management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the
forward-looking statements.
The following factors, among others, could cause actual results to
differ materially from the anticipated results or other expectations expressed
in the forward-looking statements: (1) the risk that the businesses of First
Union and Wachovia will not be integrated successfully or such integration may
be more difficult, time-consuming or costly than expected; (2) expected revenue
synergies and cost savings from the merger may not be fully realized or realized
within the expected time frame; (3) revenues following the merger may be lower
than expected; (4) deposit attrition, operating costs, customer loss and
business disruption following the merger, including, without limitation,
difficulties in maintaining relationships with employees, may be greater than
expected; (5) the ability to obtain governmental approvals of the merger on the
proposed terms and schedule; (6) the failure of First Union's and Wachovia's
stockholders to approve the merger; (7) competitive pressures among depository
and other financial institutions may increase significantly and have an effect
on pricing, spending, third-party relationships and revenues; (8) the strength
of the United States economy in general and the strength of the local economies
in which the combined company will conduct operations may be different than
expected resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit, including the
resultant effect on the combined company's loan portfolio and allowance for loan
losses; (9) changes in the U.S. and foreign legal and regulatory framework; and
(10) adverse conditions in the stock market, the public debt market and other
capital markets (including changes in interest rate conditions) and the impact
of such conditions on the combined company's capital markets and asset
management activities. Additional factors that could cause First Union's and
Wachovia's results to differ materially from those described in the
forward-looking statements can be found in First Union's and Wachovia's reports
(such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K) filed with the Securities and Exchange Commission and
available at the SEC's Internet site (http://www.sec.gov). All subsequent
written and oral forward-looking statements concerning the proposed transaction
or other matters attributable to First Union or Wachovia or any person acting on
their behalf are expressly qualified in their entirety by the cautionary
statements above. First Union and Wachovia do not undertake any obligation to
update any forward-looking statement to reflect circumstances or events that
occur after the date the forward-looking statements are made.
The proposed transaction will be submitted to First Union's and Wachovia's
stockholders for their consideration, and, on June 27, 2001, First Union filed
an amended registration statement on Form S-4 with the SEC containing a joint
proxy statement/prospectus of First Union and Wachovia and other relevant
documents concerning the proposed transaction. Stockholders are urged to read
the joint proxy statement/prospectus contained in the registration statement and
any other relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important information.
You will be able to obtain a free copy of the joint proxy statement/prospectus,
as well as other filings containing information about First Union and Wachovia,
at the SEC's Internet site (http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the SEC filings that will be incorporated by reference
in the joint proxy statement/prospectus can also be obtained, without charge, by
directing a request to First Union, Investor Relations, One First Union Center,
Charlotte, North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor
Relations, 100 North Main Street, Winston-Salem, North Carolina 27150
(888-492-6397).
First Union and Wachovia, and their respective directors and executive
officers, and others may be deemed to be participants in the solicitation of
proxies from the stockholders of First Union and Wachovia in connection with the
merger. Information about the identity of participants in the solicitation and a
description of their direct or indirect interests, by security holdings or
otherwise, is set forth in an exhibit to the registration statement and in the
joint proxy statement/prospectus regarding the proposed transaction.
THE FOLLOWING NEWS RELEASE WAS ISSUED BY FIRST UNION AND WACHOVIA
[FIRST UNION LOGO APPEARS HERE] [WACHOVIA LOGO APPEARS HERE]
Wednesday Media Contacts:
June 27, 2001 First Union: Mary Eshet 704-383-7777
Wachovia: Ed Hutchins 336-732-4200
Investor Contacts:
First Union: Alice Lehman 704-374-4139
Wachovia: Robert S. McCoy Jr. 336-732-5926
Marsha Smunt 336-732-5788
FIRST UNION AND WACHOVIA TO MAIL PROXY MATERIALS
Merger Proxy Statements Declared Effective by SEC
Charlotte and Winston-Salem, N.C. - First Union Corporation (NYSE: FTU) and
Wachovia Corporation (NYSE: WB) announced today that their joint merger proxy
statement has been declared effective by the Securities and Exchange Commission.
Printing of the proxy statements will begin immediately and distribution to
Wachovia and First Union shareholders is expected to begin by the end of this
week. First Union's annual meeting of shareholders is scheduled for July 31,
2001, and Wachovia's annual meeting of shareholders is scheduled for August 3,
2001.
L.M. Baker Jr., chairman and chief executive officer of Wachovia, said, "In our
view, the merger of equals with First Union is a thoughtful, strategic
combination designed to give Wachovia shareholders the same Wachovia dividend
rate and potential for superior earnings. We believe the case for our merger is
compelling, and we welcome the opportunity for shareholders of both companies to
review this proposed combination."
Ken Thompson, chairman and chief executive officer of First Union, said, "The
mailing of the proxy statement is an important milestone in the merger process.
The integration planning process continues at full speed, and we are more
enthusiastic than ever about the growth prospects for the new Wachovia. We look
forward to the votes on July 31st and August 3rd, when we shareholders of both
companies will have the opportunity to vote on this combination."
First Union: (NYSE:FTU), with $253 billion in assets and stockholders' equity of
$16 billion at March 31, 2001, is a leading provider of financial services to 15
million retail and corporate customers throughout the East Coast and the nation.
The company operates
full-service banking offices in 11 East Coast states and Washington, D.C., and
full-service brokerage offices in 47 states and internationally. Online banking
products and services can be accessed through www.firstunion.com.
Wachovia (NYSE: WB) is a major interstate financial holding company offering
banking and financial services to individuals primarily in Florida, Georgia,
North Carolina South Carolina and Virginia and to corporations and institutions
throughout the United States and globally. Wachovia Corporation is headquartered
in Winston-Salem, N.C., and Atlanta and had assets of $75.6 billion at March 31,
2001. Wachovia Web site is located at www.wachovia.com.
This news release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including, without
limitation, (i) statements about the benefits of the merger between First Union
Corporation and Wachovia Corporation, including future financial and operating
results, cost savings, enhanced revenues, and accretion to reported earnings
that may be realized from the merger; (ii) statements with respect to First
Union's and Wachovia's plans, objectives, expectations and intentions and other
statements that are not historical facts; and (iii) other statements identified
by words such as "believes", "expects", "anticipates", "estimates", "intends",
"plans", "targets", "projects" and similar expressions. These statements are
based upon the current beliefs and expectations of First Union's and Wachovia's
management and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements: (1) the risk that the businesses of First Union and
Wachovia will not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected revenue
synergies and cost savings from the merger may not be fully realized or realized
within the expected time frame; (3) revenues following the merger may be lower
than expected; (4) deposit attrition, operating costs, customer loss and
business disruption following the merger, including, without limitation,
difficulties in maintaining relationships with employees, may be greater than
expected; (5) the ability to obtain governmental approvals of the merger on the
proposed terms and schedule; (6) the failure of First Union's and Wachovia's
stockholders to approve the merger; (7) competitive pressures among depository
and other financial institutions may increase significantly and have an effect
on pricing, spending, third-party relationships and revenues; (8) the strength
of the United States economy in general and the strength of the local economies
in which the combined company will conduct operations may be different than
expected resulting in, among other things, a deterioration in credit quality or
a reduced demand for credit, including the resultant effect on the combined
company's loan portfolio and allowance for loan losses; (9) changes in the U.S.
and foreign legal and regulatory framework; and (10) adverse conditions in the
stock market, the public debt market and other capital markets (including
changes in interest rate conditions) and the impact of such conditions on the
combined company's capital markets and asset management activities. Additional
factors that could cause First Union's and
Wachovia's results to differ materially from those described in the
forward-looking statements can be found in First Union's and Wachovia's reports
(such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K) filed with the Securities and Exchange Commission and
available at the SEC's Internet site (http://www.sec.gov). All subsequent
written and oral forward-looking statements concerning the proposed transaction
or other matters attributable to First Union or Wachovia or any person acting on
their behalf are expressly qualified in their entirety by the cautionary
statements above. First Union and Wachovia do not undertake any obligation to
update any forward-looking statement to reflect circumstances or events that
occur after the date the forward-looking statements are made.
Additional Information
The proposed transaction will be submitted to First Union's and Wachovia's
stockholders for their consideration, and, on June 27, 2001, First Union filed
an amended registration statement on Form S-4 with the SEC containing a joint
proxy statement/prospectus of First Union and Wachovia and other relevant
documents concerning the proposed transaction. Stockholders are urged to read
the definitive joint proxy statement/prospectus when available and any other
relevant documents filed with the SEC, as well as any amendments or supplements
to those documents, because they contain (or will contain) important
information. You will be able to obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing information about
First Union and Wachovia, at the SEC's Internet site (http://www.sec.gov).
Copies of the joint proxy statement/prospectus and the SEC filings that have
been or will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, by directing a
request to First Union, Investor Relations, One First Union Center, Charlotte,
North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor Relations,
100 North Main Street, Winston-Salem, North Carolina 27150 (888-492-6397).
First Union and Wachovia, and their respective directors and executive officers,
and others may be deemed to be participants in the solicitation of proxies from
the stockholders of First Union and Wachovia in connection with the merger.
Information about the identity of participants in the solicitation and a
description of their direct or indirect interests, by security holdings or
otherwise, is set forth in an exhibit to the registration statement and in the
joint proxy statement/prospectus.
THE FOLLOWING IS A TRANSCRIPT OF A PRESENTATION AT A CREDIT SUISSE FIRST BOSTON
SEMINAR. THE STATEMENTS THEREIN REPRESENT THE CURRENT OPINIONS, BELIEFS AND
EXPECTATIONS OF THE SPEAKER.
1
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7 JUNE 26, 2001
8 DON MCMULLEN
9 WEBCAST WITH
10 CREDIT SUISSE FIRST BOSTON
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2
1 >> AS YOU ALL KNOW, THE LARGE CAP BANKS, BANKS
2 GENERALLY HAVE BECOME INCREASINGLY DIVERSE, A LOT
3 OF COMPANIES PLAYING AN INCREASINGLY ACTIVE ROLE
4 IN THE ASSET MANAGEMENT BUSINESS.
5 OUR NEXT SPEAKER THIS MORNING IS DON MCMULLEN,
6 VICE CHAIRMAN AND HEAD OF FIRST UNION'S CAPITAL
7 MANAGEMENT GROUP, A GROUP WHICH INCLUDES ITS
8 BROAD-BASED MANAGEMENT BUSINESS FOR ABOUT $170
9 BILLION, AND IT ALSO INCLUDES THEIR RETAIL
10 BROKERAGE BUSINESS.
11 BETWEEN 1995 AND 2000 THROUGH ACQUISITIONS AND
12 ORGANIC GROWTH, FIRST UNION MANAGED TO GROW ITS
13 ASSETS UNDER MANAGEMENT AT AN IMPRESSIVE NEAR 30%
14 RATE.
15 I'M GOING TO TURN THE PODIUM OVER TO DON, BUT,
16 FIRST, I'VE BEEN GIVEN THE OPPORTUNITY TO READ A
17 LITTLE SEC MANDATED THING HERE.
18 BEFORE WE BEGIN, PLEASE LET ME REMIND YOU THAT
19 ANY FORWARD-LOOKING STATEMENTS MADE DURING THIS
20 PRESENTATION ARE SUBJECT TO RISKS AND
21 UNCERTAINTY.
22 FACTORS THAT COULD CAUSE FIRST UNION'S RESULTS TO
23 DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
24 STATEMENTS ARE SET FORTH IN FIRST UNION'S PUBLIC
25 REPORTS FILED WITH THE SEC INCLUDING FIRST
3
1 UNION'S REGISTRATION STATEMENT ON FORM S-4
2 RELATING TO THE PROPOSED MERGER WITH WACHOVIA.
3 PLEASE READ THAT DOCUMENT AND OTHER RELATED
4 DOCUMENTS FILED WITH THE SEC WHICH ALSO CONTAIN
5 INFORMATION REGARDING THE INTERESTS OF CERTAIN
6 PARTICIPANTS IN THE PROXY SOLICITATION.
7 THESE DOCUMENTS CAN BE OBTAINED FOR FREE AT THE
8 SEC'S WEBSITE AND FROM FIRST UNION AND WACHOVIA.
9 DON?
10 [ LAUGHTER ]
11 >> DON: GOOD MORNING, ANY QUESTIONS?
12 GOOD MORNING TO EVERYBODY IN ATTENDANCE AND TO
13 THE FOLKS LISTENING ON THE WEBCAST TODAY.
14 IT'S AN HONOR TO BE HERE, QUITE CANDIDLY, WITH SO
15 MANY FRIENDS, COMPETITORS, TEAMMATES THAT WE WORK
16 WITH IN THIS INDUSTRY AS IT'S REALLY BLENDED
17 TOGETHER, AND MANY TIMES, I THINK, AS THE TITLE
18 SUGGESTS, FOLKS CALL US FROM TIME TO TIME TO TALK
19 ABOUT THIS WHOLE BANK STUFF.
20 WHAT IS GOING ON IN THE BANK DISTRIBUTION
21 NETWORK? EVEN THE TITLE I WAS GIVEN TO TALK
22 ABOUT, ATTACKING THE DISTRIBUTION BOTTLE NECK, IS
23 AN INDICATION OF SORT OF THE PERCEPTION THAT'S
24 OUT THERE AROUND THE BANKING CHANNELS.
25 WE SORT OF WANTED TO RETITLE IT AKA, ALSO KNOWN
4
1 AS, REALLY TAKING A BANK CHANNEL, IF YOU WILL,
2 AND OPTIMIZING THAT TO YOUR ADVANTAGE TO BE THE
3 KEY TO BUILD WHAT I WOULD CALL A MULTICHANNEL
4 PLATFORM INTO A FINANCIAL SERVICES POWERHOUSE.
5 I JOINED FIRST UNION IN 1995, MIXED BACKGROUND
6 WITH ASSET MANAGEMENT FIRMS AND BANKING
7 EXPERIENCE; AND AT THAT TIME, WHAT I REALLY SAW
8 WORKING IN DIFFERENT SIDES OF THE INDUSTRY IS THE
9 POTENTIAL THAT WAS OUT THERE, AND THE MODEL THAT
10 WE ATTEMPTED TO BUILD STARTING IN 1995, AND IT
11 WOULD HAVE BEEN A LOT DIFFERENT BACK THEN,
12 BECAUSE WE REALLY SAW AN INSTITUTION THAT WAS A
13 LARGE BANKING INSTITUTION, BUT ALSO UNDERSTOOD
14 THE FINANCIALS OF THE WORLD:
15 WHERE THE CONSUMER WAS GOING, WHERE THE CLIENT
16 WAS GOING IN TERMS OF INVESTMENT PRODUCTS, WHERE
17 PEOPLE WERE VOTING WITH THEIR FEET.
18 WHAT WE STARTED TO DO WAS TRY TO CONSTRUCT THE
19 MODEL THAT WOULD TAKE ADVANTAGE OF ALL THE
20 SERVICES THAT CLIENTS CAME TO HAVE, THE
21 DISTRIBUTION CAPABILITY, AND WE WANTED TO REALLY
22 BUILD OUT A BALANCE MODEL.
23 SO IF YOU LOOK AT IT TODAY, WE HAVE A SITUATION
24 WHERE OUR TRADITIONAL GENERAL BANK IS REALLY
25 GENERATING ONLY 45% AS THE KEY CORE OF THE
5
1 ORGANIZATION, BUT WE BLENDED IN THE OTHER KIND OF
2 SKILL SETS THAT I THINK ARE GOING TO BE NECESSARY
3 TO COMPETE IN THE COMING YEARS.
4 FOR EXAMPLE, WHAT I'M HERE TO DO TODAY IS TALK
5 ABOUT THE CAPITAL MANAGEMENT AREA, AND WE'VE COME
6 TO A POINT THAT'S SIGNIFICANT.
7 WE'RE ABOUT 26% OF THE REVENUES.
8 WE'RE $168 BILLION OF ASSET UNDER MANAGEMENT.
9 WHEN YOU LOOK AT IT FROM A BROKERAGE POINT OF
10 VIEW, WE'RE THE THIRD LARGEST BANK-OWNED
11 BROKERAGE FIRM BEHIND CITICORP, AND WE DO HAVE
12 THE PRESENCE IN 47 STATES.
13 WE MANAGE ABOUT $87 BILLION IN MUTUAL FUNDS, AND
14 WE HAVE A VARIETY OF SERVICES IN THE WEALTH,
15 TRUST, 401(K), INSURANCE AREA.
16 OUR WHOLE PHILOSOPHY FROM THE BEGINNING WAS TO
17 TRY TO TAKE A LOOK REALLY FROM THE CUSTOMER'S
18 POINT OF VIEW, WHETHER THAT CUSTOMER BE AN
19 INDIVIDUAL, SMALL BUSINESS, COMMERCIAL TYPE OF
20 ENTITY; AND IF YOU LOOK AT IT, AND YOU SORT OF
21 SAID, WELL, WHAT ARE THE KINDS OF SERVICES THAT
22 THESE INDIVIDUALS NEED AS YOU GO FORWARD? YOU
23 LOOK AT THE PRODUCTS THAT ASSET MANAGEMENT,
24 FINANCIAL PLANNING, BROKERAGE SERVICES, INSURANCE
25 TYPE SERVICES, ALL YOUR TRADITIONAL BANKING,
6
1 CONSUMER, FINANCE, RETAIL, SMALL BUSINESS
2 BANKING, AND TRUST SERVICES.
3 THIS IS WHAT WE'VE BEEN BUILDING OVER THE LAST
4 FOUR TO FIVE YEARS, AND, AGAIN, MANY OF YOU
5 PROBABLY KNOW FIRST UNION MORE BECAUSE OF A LOT
6 OF THE BANKING ACTIVITIES, BUT WHAT WE HAVE
7 QUIETLY DONE IS BUILD A STRONG PRODUCT SKILL SET.
8 THEN WE'VE COUPLED THAT WITH -- I'M VERY BIASED
9 AND I'M IN FAVOR OF ADVICE GIVING.
10 WE'RE AN ADVISER GIVING RELATIONSHIP. WE BELIEVE
11 IN WRAPPING ADVISEMENT AROUND THE RELATIONSHIP.
12 WE PUT IN SERIES SIX AND SEVEN INDIVIDUALS.
13 WE HAVE WEALTH MANAGERS, PRIVATE CAPITAL
14 MANAGERS, IF YOU WILL.
15 WE HAVE THE WHOLE SERIES SEVEN WORK FORCE.
16 WE HAVE TELEPHONE DIRECT SPECIALISTS THAT
17 INTERFACE WITH CLIENTS, INSTITUTIONAL TRUST
18 REPRESENTATIVES.
19 OF COURSE, WE HAVE THE ON-LINE THAT WE DEVELOPED,
20 BUT THE WHOLE IDEA WAS TO TAKE OUR CLIENT BASE,
21 TAKE THAT PRODUCT SKILL SET AND THEN TRY TO BLEND
22 IT WITH TAILORED ADVICE TO ALLOW THE CUSTOMER TO
23 BASICALLY HAVE A SINGLE POINT FOR SOLUTIONS, AND
24 REALLY COMBINING THAT WITH ALL OF THE TYPES OF
25 SERVICES THAT ARE OUT THERE TODAY.
7
1 HERE'S WHERE WE ARE IN THE STORY TODAY.
2 IF YOU GO BACK TO 1995 WHEN I FIRST CAME ON THE
3 SCENE, WE WERE LAYING OUT OUR STRATEGY.
4 WE SAID WE WANTED TO BE A MAJOR PLAYER IN THESE
5 BUSINESSES.
6 LIKE A LOT OF THE PRESENTATIONS I THINK YOU'RE
7 GOING TO HEAR TODAY AND YOU HAVE HEARD FROM MITCH
8 IS OBTAINING SOME SORT OF MASS AND SCALE ON THESE
9 BUSINESSES, I THINK WILL BE CRITICAL FOR
10 COMPETITION IN THE YEARS AHEAD, AND IF YOU LOOK
11 AT IT STARTING WITH THE BROKERAGE SIDE, TODAY
12 FROM THE NUMBER OF REPS, WE'RE THE SIXTH LARGEST.
13 WE'RE THE EIGHTH LARGEST IN THE AMA ACCOUNTS,
14 WHICH IS THE CASH MANAGEMENT SWEEP ACCOUNTS
15 COMBINING BANKING AND BROKERAGE.
16 OUR INSURANCE EFFORT, WE'VE COME A LONG WAY, AND
17 WE'RE BEHIND ONLY TO CITICORP.
18 THE PRIVATE CAPITAL MANAGEMENT AREA, SOMETHING
19 WE'RE ALL GOING TO HAVE TO DEAL WITH AT SOME
20 POINT, AND IT'S SOMETHING I CALL GETTING OLDER,
21 AND YOU'VE GOT A DEMOGRAPHIC RIGHT NOW WHERE WE
22 HAVE A LOT OF FOLKS AS THEY GET INTO THE 50s AND
23 MID-50s, THEY'RE STARTING TO UNDERSTAND WHAT
24 ESTATE PLANNING MEANS.
25 THEY'RE STARTING TO UNDERSTAND WHAT INHERITANCE
8
1 TAX MEANS, AND THERE'S AN UNBELIEVABLE DYNAMIC
2 THAT'S GOING ON IN THE NEXT 20 YEARS, 30 YEARS
3 AROUND THAT WHOLE TOPIC.
4 MUTUAL FUNDS, TODAY, WE RANK 21st FROM THE LATEST
5 REPORTING STATISTICS.
6 WE A VERY LARGE INSTITUTIONAL MANAGER, AND THE
7 401(K) BUSINESS IS SOMETHING THAT WE THINK WILL
8 BE VERY IMPORTANT.
9 IN TERMS OF THE HISTORY OF WHERE WE'VE COME FROM,
10 MANY ANALYSTS ASK US THESE QUESTIONS, AND WE TRY
11 TO ANTICIPATE AND PUT IT UP ON THE SCREEN.
12 IN 1995, WE HAVE ROUGHLY 400 MILLION OF REVENUE
13 IN THIS AREA TODAY AND IN 2000 REPORTED DATA THAT
14 WE HAVE OUT THERE ALREADY.
15 WATCHING THE PRECAUTIONARY STATEMENT, NOT TO GIVE
16 A FORWARD-LOOKING COMMENT, WE FINISHED LAST YEAR
17 WITH $3.7 BILLION IN REVENUE, AND IF YOU ADJUST
18 FOR THE ACQUISITIONS, -- AND WE WILL SHOW YOU
19 THAT LATER ON --IT WAS A 30% GROWTH RATE.
20 AS YOU LOOK AT THE DIRECT BOTTOM LINE
21 CONTRIBUTION, WE WENT FROM 200 MILLION PLUS TO A
22 BILLION PLUS, AND AGAIN, ADJUSTING GRAPH
23 POSITIONS, THAT WOULD BE IN THE MID-20s, ABOUT
24 25% ORGANIC GROWTH RATE.
25 IF YOU LOOK AT SOME OF THE PRODUCT LINES THAT WE
9
1 FOCUSED ON, IF YOU REMEMBER, WE SAID WHEN WE
2 LOOKED AT IT, CUSTOMERS WERE LEAVING THE BANK
3 BECAUSE THEY WANTED TO GET MUTUAL FUNDS. THEY
4 WANTED BROKERAGE ADVICE, ET CETERA.
5 THE MAJOR PRODUCT LINES EARLY ON WERE TO BUILD
6 MUTUAL FUND CAPABILITY.
7 WE WENT TO 85 BILLION REPORTED AT THE END OF THE
8 YEAR, AGAIN, ADJUSTING FOR ACQUISITIONS AS 24%
9 GROWTH RATE OVER THAT PERIOD.
10 BROKERAGE CLIENTELE WENT FROM 10 BILLION TO 205
11 BILLION IN ASSETS, 31% GROWTH.
12 AMA ASSETS, 12 TO 121 BILLION, 38%; ASSETS UNDER
13 MANAGEMENT, 47 TO 171, ABOUT A 19% GROWTH RATE.
14 WE DIDN'T PUT THE INSURANCE IN THERE, AND IT'S AN
15 ASSET PER SE, AND IN ITS MOST SPECIFIC SENSE, AND
16 THE GROWTH RATE WOULD HAVE BEEN PHENOMENAL.
17 WE WERE DOING ANNUITY TYPE OF BUSINESS.
18 WE DID ABOUT A 1.8 BILLION LAST YEAR.
19 A SUPER PRODUCT IN THE MARKETPLACE OUT THERE,
20 ESPECIALLY FOR OUR BANK CHANNEL, IS FIXED
21 ANNUITIES BECAUSE IT ALLOWS PEOPLE TO TAKE THE
22 FIRST STEP, IF YOU WILL, TOWARD SOME TYPE OF
23 INVESTMENT PRODUCT, AND THEN YOU CAN ADD INTO
24 THAT VARIABLE ANNUITIES, WHICH WE'VE DONE IN THE
25 LAST SEVERAL YEARS.
10
1 THIS SLIDE, MANY TIMES YOU CAN'T SEE IT.
2 OUR WHOLE STRATEGY HAS BEEN TO BUILD, IF YOU
3 WILL, A BALANCE.
4 THAT'S SUPPOSED TO BE A SCALE.
5 IF YOU LOOK AT THE CAREER I'VE HAD, SOMETIMES
6 I'VE WORKED ON THE DISTRIBUTION SIDE.
7 SOMETIMES I'VE WORKED ON THE PRODUCT SIDE, AND
8 BOTH HAVE VERY STRONG POSITIVES AND SOME
9 NEGATIVES TO THEM.
10 ON THE DISTRIBUTION SIDE, QUITE CANDIDLY, IT'S
11 NOT AS HIGH MARGIN TYPE OF BUSINESS AS THE
12 PRODUCT LINE, BUT IT'S SURE GREAT FOR HAVING
13 CUSTOMER RELATIONSHIPS AND THE ABILITY TO GROW
14 AND BUILD.
15 PRODUCTS OFFER A TERRIFIC MARGIN, BUT ONCE AGAIN,
16 GREAT PRODUCT WITHOUT A LOT OF DISTRIBUTION CAN
17 ALSO BE A VERY DIFFICULT TASK.
18 WHAT WE WANTED TO DO IS TRY TO BALANCE THOSE TWO
19 AS WE WENT THROUGH TIME, SO IF YOU FOLLOW THE
20 LAST FOUR OR FIVE YEARS WITH US, WHAT WE'VE BEEN
21 DOING IS A COMBINATION OF TRYING TO BUILD OFF
22 SKILL SET ON EITHER SIDE OF THAT SCALE, BUT,
23 TODAY, WHAT WE TRIED TO EVOLVE TO IS ON THE
24 LEFT-HAND SIDE IS MULTIPLE DISTRIBUTION CHANNELS,
25 GOING BACK TO THAT BANK STATEMENT.
11
1 STARTING WITH THAT ADVANTAGE THAT WE HAD WITH THE
2 LARGE BANKING ORGANIZATION, GREAT CHANNEL BUT WE
3 WERE MISSING THE WHOLE CHANNEL THAT MANY OF US
4 LOOK AT ONLY, THE BROKERAGE CHANNEL AS THE ONLY
5 PLACE TO GET ADVICE, AND WE NEEDED TO DEVELOP
6 THAT KIND OF CHANNEL ALSO.
7 SO WE LAUNCHED OUR NATIONAL BROKERAGE STRATEGY,
8 AND THE HIGH NET WORTH AREA, WE CALL PRIVATE
9 CAPITAL MANAGEMENT.
10 INDIVIDUALS IN THAT AREA NEED A WHOLE ARRAY OF
11 SERVICES, ESTATE PLANNING, SOPHISTICATED TAX
12 MANAGEMENT, THE WHOLE TRUST AREA.
13 THERE'S JUST A WHOLE LOT OF SERVICES THERE THAT'S
14 NOT -- IT'S A DISTRIBUTION CHANNEL ITSELF THAT
15 HAPPENED TO THAT NETWORK.
16 EVERGREEN DISTRIBUTION REFERS TO THE MUTUAL FUND
17 STRATEGY.
18 AGAIN, WE DON'T USE THE WORD PROPRIETARY BECAUSE
19 WE DON'T WANT TO RUN A PROPRIETARY MUTUAL FUND
20 GROUP.
21 WE WANT TO RUN A MUTUAL FUND GROUP, AND IF IT'S
22 GOOD, IT WILL BE COMPETITIVE.
23 IF IT'S NOT, WE'LL CHANGE MANAGEMENT AND MOVE ON.
24 BUT IT IS SOMETHING THAT YOU HAVE TO RUN AS A
25 GREAT BUSINESS, BUT YET THERE'S A DISTRIBUTION
12
1 CHANNEL THERE.
2 THE INSTITUTIONAL MARKET IS A DISTRIBUTION
3 CHANNEL.
4 AGAIN, CONTACT POINTS IN THE LIKE AND THEN THE
5 ON-LINE CHANNEL.
6 FLIP OVER TO THE RIGHT-HAND SIDE. WE HAVE A FULL
7 ARRAY OF INVESTMENT MANAGEMENT PRODUCTS, MUTUAL
8 FUNDS, WRAP ACCOUNTS WHICH ARE VERY, VERY LARGE
9 IN RECENT YEARS.
10 PERSONAL TRUST SERVICES, AMA SERVICES, AND
11 INSURANCE, AND 401(K).
12 LET'S LOOK AT WHERE WE STARTED.
13 IN 1995, WE LOOKED AT AND REALIZED OUR STRENGTH
14 WAS A FAST-GROWING BANKING FRANCHISE.
15 WE HAD SOMETHING LIKE 2,000 FINANCIAL CENTERS.
16 WE HAD A NUMBER OF TELEPHONE CENTERS WHERE FOLKS
17 CAN CALL IN.
18 WHEN THEY'RE MOVING FROM ONE CITY TO ANOTHER,
19 OFTEN THE FIRST CALL THEY MAKE IS TO A BANK TO
20 SEE WHAT KINDS OF SERVICES ARE OUT THERE.
21 LARGE ATM NETWORK, WHICH WAS VERY, VERY IMPORTANT
22 TO WHAT WE CALL OUR CAP ACCOUNT, WHICH IS THE
23 BROKERAGE TYPE OF BANKING ACCOUNT, BUT PUTTING AN
24 ATM NETWORK INTO THAT MADE THAT ACCOUNT VERY
25 POSITIVE.
13
1 OUR WHOLE ON-LINE CAPABILITY GAVE US ACCESS TO
2 ABOUT 1.8 MILLION CLIENTS USING THE ON-LINE
3 ACCESS FOR FIRST UNION BANKING PRODUCTS IN THE
4 LIKE.
5 WHAT WE DID IS WE WENT OUT AND TRIED TO BASICALLY
6 LOOK AT EVERY BRANCH AND SAY WE WANT TO HAVE
7 SOMEWHERE IN THE NEIGHBORHOOD OF TWO FINANCIAL
8 SPECIALISTS IN EACH OF THOSE BRANCHES.
9 IN OTHER WORDS, A LICENSED INDIVIDUAL, WHETHER IT
10 BE SERIES SIX OR SERIES SEVEN, AND THE IDEA TO
11 BEGIN TO TALK WITH OUR CLIENTS, CUSTOMERS, FIND
12 OUT WHAT THEIR NEEDS AND SERVICES ARE AND LET
13 THEM KNOW THAT WE HAVE, INDEED, THE ABILITY TO
14 OFFER BROKERAGE TYPES OF SERVICES.
15 AS WE DID THAT, IT WAS VERY CLEAR FROM A LOT OF
16 OUR WORK THAT MANY INDIVIDUALS OUT THERE WILL
17 ONLY SEE A BANK FOR CERTAIN THINGS, AND THEY'LL
18 ONLY SEE A BROKERAGE FIRM FOR CERTAIN THINGS.
19 WHAT WE NEEDED TO DO IS DEVELOP A BRAND AND
20 IDENTITY IN HOW TO BANK CHANNEL, AND YOU MAY HEAR
21 THAT PHRASE TODAY, AND WE BOUGHT THE OLD WHEAT,
22 BUTCHER-SINGER ORGANIZATION, THE EVEREN
23 ORGANIZATION, FIRST ALBANY, J.W. GENESIS, AND
24 TODAY, WE'RE A NATIONWIDE BROKERAGE FIRM.
25 WE'RE IN 47 STATES.
14
1 WE HAVE 531 BROKERAGE OFFICES THAT ARE
2 STAND-ALONE BROKERAGE OFFICES AND HAVE NOTHING
3 ASSOCIATED WITH THE BANK, AND WE HAVE 76 OFFICES
4 THAT WE DEVELOPED OUT WHERE WE DO HIGH NET WORTH
5 TYPE OF BUSINESS, TRUST BUSINESS, INVESTMENT
6 OFFICERS, ESTATE PLANNERS, ET CETERA, AND THAT'S
7 OBVIOUSLY TRYING TO FOCUS ON CERTAIN MARKETS
8 WHERE THERE'S A LOT OF CLUSTERS OF WEALTH.
9 AND THE GREAT NEWS FOR US WAS THE BANKING
10 FRANCHISE BEING A STRONG EAST COAST ORGANIZATION
11 AND PUT US NATURALLY IN A LOT OF THOSE AREAS.
12 IF YOU BREAK THAT DOWN, AGAIN, BY THE NUMBER OF
13 TYPES OF INDIVIDUALS THAT WE HAVE IN EACH OF
14 THESE MODELS, YOU CAN SEE THE GROWING ADVISER
15 MODEL THAT WE HAVE, AND TODAY AT THE END OF THE
16 FIRST QUARTER, WE WERE ROUGHLY 7,784 LICENSED
17 INDIVIDUALS BROKEN DOWN WITH A STRATEGY OF
18 OUT-OF-BANK SERIES SEVEN, IN-BANK SERIES SEVEN,
19 LICENSED SERIES SIX, AND THE ORANGE BAR AT THE
20 TOP THERE IS THE INDEPENDENT CHANNEL, WHICH WE'RE
21 DEVELOPING OUT WITH THE ACQUISITION OF J.W.
22 GENESIS.
23 SO WHEN YOU LOOKED AT THIS, WHAT WE WERE TRYING
24 TO DO IS, ONE, MEET THE CLIENTS, MAYBE YOU AND I
25 AS INDIVIDUALS, THE WAY WE WANT TO BE MET.
15
1 HAVE THE STORE FRONT THAT YOU AND I ARE
2 COMFORTABLE DOING BUSINESS IN, BUT SINCE WE'RE
3 ORIENTED TO DRIVER TYPES OF BUSINESSES, WE WANTED
4 TO CREATE A HOME FOR INVESTMENT ADVISERS THAT
5 THEY WOULD WANT TO WORK IN.
6 IF YOU LOOK AT THIS SCHEMATIC, YOU'RE LOOKING AT
7 THE ABILITY IF YOU'RE A GREAT FINANCIAL ADVISER
8 AND YOU WANT TO MAKE YOUR BUSINESS BEING A
9 BROKER, FINANCIAL ANALYST, CONSULTANT, HOWEVER
10 YOU REFER TO THAT FUNCTION TODAY, WE HAVE THE
11 ABILITY TO TRACK SOMEONE FOR A BANKING CHANNEL,
12 WHICH IS A TOTALLY DIFFERENT CHARACTERISTIC THAN
13 TRADITIONAL NATIONAL BROKERAGE CHANNEL.
14 ON TOP OF THAT, WE HAVE THE INDEPENDENT CHANNEL,
15 AND I PUT CLEARING IN THERE ALSO BECAUSE WE
16 DEVELOPED A CLEARING BUSINESS THAT WE'RE EXCITED
17 ABOUT.
18 NOT SO MUCH FOR JUST DAY IN AND DAY OUT CLEARING,
19 BUT REALLY TO SUPPORT A LOT OF FIRMS THAT ARE
20 RUNNING MORE AS AN INDEPENDENT, AND WE CAN OFFER
21 THEM A VERY BROAD PRODUCT SWEEP AS WELL AS THE
22 INDEPENDENCE, AND OF COURSE, THE ON-LINE
23 CAPABILITY, WHICH WE FELT WE HAD TO DEVELOP
24 ESPECIALLY IN ALL OF THE HAY DAY OF EVERYBODY
25 TALKING ABOUT ON-LINE AND DO IT YOURSELF, WHAT WE
16
1 WANTED TO DO WAS SUPPORT THOSE TYPES OF ON-LINE
2 INQUIRIES IN THE LIKE WITH SERVICES AND SUPPORT,
3 AND WE WANTED TO TIE IT IN WITH INVESTMENT
4 ADVISER DRIVEN TYPE OF STRATEGY.
5 LET'S LOOK AT THE BANK SIDE FOR A SECOND.
6 TODAY, WE HAVE ABOUT $34 BILLION OF CLIENT
7 ASSETS.
8 WE HAVE 874,000 ACTIVE ACCOUNTS.
9 ONE OF THE STRATEGIES IS TO CONTINUE TO EVOLVE
10 THIS BUSINESS TO BE A MORE RECURRING FEE
11 BUSINESS.
12 THIS IS BASICALLY BEING PAID AS AN ADVISER, AND
13 HAVING A RECURRING FEE AND NOT LIVING OFF THE
14 TRANSACTION VOLUME.
15 IF YOU LOOK AT THE -- JUST TO GIVE SOME
16 PERSPECTIVE TODAY, MASS AND SCALE, SIZE AND SCALE
17 ARE IMPORTANT.
18 YOU CAN PROBABLY HAVE THREE DAYS OF PRESENTATIONS
19 WHERE JUST ABOUT EVERY BANK IS IN THIS BUSINESS.
20 THIS IS THE KEY.
21 DO THEY REALLY HAVE THE SIZE AND SCALE? AS WE
22 STATED AT THE TOP, OUR BANK PUTS US IN A GOOD
23 FOOTPRINT WHEN YOU LOOK AT ITS EAST COAST
24 ORIENTATION AND THE NUMBER OF INCOME MARKETS.
25 IF YOU LOOK AT THE FINANCIAL CENTERS COUPLED WITH
17
1 THE BROKERS, WHAT WE DID WAS ROUGHLY 5.5 BILLION
2 WORTH OF PRODUCT, AND WE'RE A FAN OF OPEN
3 ARCHITECTURE.
4 OUR ADVISERS, TO DO BUSINESS, THEY HAVE TO REALLY
5 BE FREE TO CHOOSE FROM ANY TYPE OF PRODUCTS LINES
6 THEY WANT. WE DO THAT.
7 IF YOU PUT THAT TOGETHER, YOU SEE ANNUITIES, 1.8
8 BILLION.
9 NON-PROPRIETARY MUTUAL FUNDS, 1.9 BILLION.
10 THAT'S WHY I SAY THERE'S A LOT OF FRIENDS IN THE
11 ROOM BECAUSE WE WORK TOGETHER SELLING THEIR
12 PRODUCTS, AND 1.8 BILLION OF EVERGREEN, BUT THAT
13 5.5 BILLION, IF YOU LOOK IN THE DIFFERENT
14 RANKINGS IN THE LIKE, THAT'S A NATURED OFFERING
15 IN AND OF ITSELF.
16 THE NATIONAL CHANNEL, WE HAVE 130 BILLION OF
17 CLIENT ASSETS.
18 ABOUT 1.6 ACTIVE ACCOUNTS WORKING ON THE
19 RECURRING FEE PERCENTAGE.
20 IF YOU LOOK AT THE INDEPENDENT CHANNEL, WHICH IS
21 NOW UP TO 30 BILLION IN CLIENT ASSETS, 450,000
22 ACTIVE ACCOUNTS.
23 HIGHER PERCENTAGE OF RECURRING FEES THERE BECAUSE
24 WE DO A FAIR AMOUNT OF THAT BUSINESS ON A
25 FEE-BASED BUSINESS TO SUPPORT A NUMBER OF THE
18
1 CLEARING FIRMS, AND THEN ON-LINE, NEVER GOT TO
2 THE TOTALS THAT A LOT OF PEOPLE THOUGHT, BUT IT'S
3 BECOME A HELPFUL KIND OF THING THAT TIES THE
4 BROKERS IN TOGETHER WITH THE CLIENTS THAT WANT
5 THOSE TYPES OF ACTIVITIES.
6 IF YOU PUT THAT ALL TOGETHER, YOU HAVE A SUITE OF
7 ORGANIZATIONS THAT AN ADVISER CAN CHOOSE.
8 YOU WANT TO BE THE FIRM OF CHOICE FOR THOSE
9 ADVISERS, AND WE ALSO SUBSCRIBE TO THE ONENESS
10 THEORY.
11 BY THAT, I MEAN, WE HAVE ONE BACK OFFICE, ONE
12 TECHNOLOGY PLATFORM, ONE SUITE OF PRODUCTS, ET
13 CETERA, SO IF YOU HAPPEN TO BE AN ADVISER, AND
14 YOU WANT TO JOIN US, IT DOESN'T MATTER WHICH
15 CHANNEL YOU SIT IN, YOU HAVE THE BASIC SUPPORT
16 SYSTEM, PRODUCT SYSTEM, AND THAT PRODUCT SYSTEM
17 BY THE WAY, ALSO INCLUDES BANKING PRODUCTS, WHICH
18 IS VERY, VERY IMPORTANT TO TIE UP THE
19 RELATIONSHIP FROM ANY OF THESE ADVISERS, AND THAT
20 ONE MANAGEMENT STRUCTURE HELPED US GAIN SOME
21 EFFICIENCIES AND HELPED US DOING THIS DURING THIS
22 RECENT TIME PERIOD WITH TOUGHNESS IN THE
23 MARKETPLACE.
24 WHEN YOU LOOK AT WHAT TYPE OF DISTRIBUTION IS
25 THIS WHEN YOU PUT IT ALTOGETHER, ACTUALLY, THIS
19
1 WHOLE TEAM SOLD ABOUT $11 BILLION WORTH OF
2 PRODUCTS, AND THE ONLY PRODUCTS I'M PICKING ON
3 ARE THE MORE VISIBLE ONES THAT WE MADE AN EFFORT
4 IN, MUTUAL FUNDS, THE ANNUITIES, BOTH FIXED AND
5 VARIABLE.
6 SO IF YOU LOOK AT THAT WHOLE LIST, THAT'S ABOUT
7 $12 BILLION WORTH OF PRODUCT.
8 ABOUT A THIRD OF THAT, A THIRD PERCENT OF THAT,
9 WAS WITH PRODUCTS THAT WE MANUFACTURED, SO WE'RE
10 PARTICIPATING IN OUR DISTRIBUTION CHANNEL, WHICH
11 IS VERY POSITIVE.
12 IN ADDITION, AS FAR AS DISTRIBUTION FIRE POWER IS
13 CONCERNED THIS GROUP SOLD ABOUT $3 BILLION WORTH
14 OF WRAP PRODUCTS LAST YEAR, AND YOU HAVE ALL OF
15 THE COMMISSION IN THE TRADING BUSINESS OUT THERE.
16 LET ME MOVE TO ANOTHER CHANNEL, WHICH I THINK IS
17 GOING TO BE JUST A VERY, VERY IMPORTANT CHANNEL
18 TO FOCUS ON, AND THIS IS AN INTERESTING CHANNEL
19 BECAUSE FROM A BANKING POINT OF VIEW, -- AND I'M
20 TRYING TO REPRESENT THE BANKING CHANNEL IN SOME
21 RESPECTS HERE TODAY. FROM A BANKING POINT OF
22 VIEW, THIS IS ONE WHERE THE BANKING HISTORY IS
23 SORT OF AN ADVANTAGE.
24 ON THE BROKERAGE SIDE, IN A WAY, WE'VE BEEN
25 SWIMMING UPSTREAM OVER THE LAST FOUR, FIVE YEARS
20
1 TO ESTABLISH LEGITIMACY.
2 PART OF THAT WAS OVERCOME AND EASILY DONE BY
3 GETTING THE EXPERTISE OF EVEREN, WHEAT, FIRST
4 ALBANY, AND EXPERIENCED BROKERS IN THE LIKE, BUT
5 IT TOOK A WHILE FOR PEOPLE TO REALIZE THAT WE
6 COULD BE IN THE BROKERAGE BUSINESS, ESPECIALLY
7 WHEN YOU COUPLE THE PRODUCT SET.
8 WHEN YOU MOVE INTO THE HIGH NET WORTH AREA, A LOT
9 OF THESE FOLKS, THE NUMBER ONE SERVICE THAT THEY
10 NEED IS MULTIPLE SERVICES.
11 THESE FOLKS ARE BUSY. THEY'RE SUCCESSFUL.
12 THEY HAVE A LOT OF WEALTH, AND THEY TEND TO WANT
13 ONE SINGLE ADVISER, AND WE CALL THAT PCM, PRIVATE
14 CAPITAL MANAGEMENT RELATIONSHIP MANAGER.
15 WE WANT THAT PERSON TO BE AN EXPERT ON THE
16 CLIENT.
17 WE WANT THEM TO BE A CLIENT ADVOCATE FOCUSED ON
18 HELPING THEIR RELATIONSHIP.
19 WHEN YOU LOOK BELOW, THESE ARE THE TYPES OF
20 SERVICES THAT WE DO, AND MANY OF THEM ARE THE
21 TYPES OF SERVICES THAT BANKS HAVE DONE FOR
22 CENTURIES.
23 THE LENDING CAPABILITIES, THE CREDIT OFFICER, THE
24 TAX STRATEGIES, THE PERSONAL TRUST, THE ESTATE
25 PLANNING.
21
1 THESE ARE TYPES OF SERVICES THAT ARE REALLY A
2 HOME ADVANTAGE FOR THE BANKING INDUSTRY, AT LEAST
3 IF YOU HAVE BEEN IN THE HIGH NET WORTH OR TRUST
4 PART OF YOUR BUSINESS FOR A LONG TIME.
5 THIS REALLY GIVES US A VERY STRONG OPENING TO THE
6 DEMOGRAPHICS THAT ARE OUT THERE.
7 FOR THOSE OF US THAT WILL ADMIT AS WE GET OLDER,
8 YOU START THINKING ABOUT, IN FACT, HOW TO
9 MINIMIZE ESTATE TAXES.
10 HOW DO YOU PASS YOUR WILL ON? AND GOD FORBID, IF
11 SOMETHING SHOULD HAPPEN, HOW DO YOU MAKE SURE
12 YOUR HUSBAND, WIFE, KIDS ARE TAKEN OF?
13 MANY OF US HAVE OLDER PARENTS ALIVE AND YOU HAVE
14 CHILDREN ALIVE, AND YOU'RE TRYING TO EDUCATE SOME
15 OF THEM AND TRYING TO KEEP SOME OF THEM HEALTHY;
16 AND THERE'S A LOT OF CHALLENGES OUT THERE, AND SO
17 MUCH THAT A BANKING ORGANIZATION CAN DO FOR YOUR
18 TRUST IS VERY HELPFUL IN THIS AREA.
19 IF YOU LOOK AT THAT, YOU CAN SUMMARIZE IT.
20 YOU CAN SAY, WHAT DO WE HAVE GOING HERE? WE HAVE
21 A GENERAL BANK.
22 WE LOOKED AT THE CHANNEL THAT WE RESTRUCTURED,
23 AND WE TALKED ABOUT HOW IMPORTANT THIS WAS TO US,
24 AND WE REALIZED HOW MANY WEALTH CENTERS WE'RE IN,
25 AND WE LAUNCHED THIS MONTH A NEW GOLD CENTER
22
1 CONCEPT.
2 TRANSLATION: WHAT WE'RE REALLY DOING IS WE'RE
3 OUT THERE IN THOSE BANKING AREAS WHERE WE ALREADY
4 HAVE BANKS, FINANCIAL CENTERS, BRANCHES, IF YOU
5 WILL, AND WE REALIZED THAT WHAT A SWEET SPOT
6 THERE IS OUT THERE TO DEVELOP.
7 USE THAT BRICK AND MORTAR, USE THAT HOME BASE TO
8 DEVELOP HIGH NET WORTH CENTERS, PUTTING IN MORE
9 INVESTMENT MANAGEMENT AND ESTATE PLANNING TALENT,
10 PRIVATE CAPITAL MANAGEMENT RELATIONSHIP OFFICERS.
11 IN FACT, WHEN WE LOOKED THROUGH THE DATA BASE AND
12 STARTED TO FINE TUNE THAT, WE REALIZED THERE'S
13 107,000 HOUSEHOLDS DEALING WITH THE BANK THAT
14 DON'T USE US FOR THESE TYPES OF SERVICES.
15 IT'S A SWEET SPOT WE CAN DEVELOP.
16 FIRST UNION SECURITIES BUILT A BRIDGE SYSTEMS
17 LAUNCH BETWEEN OUR TRUST AND OUR BROKERAGE
18 CAPABILITY, SO IF YOU'RE A BROKER-ADVISER OUT
19 THERE IN ANY OF THE BROKERAGE CHANNELS, CHANCES
20 ARE YOU'RE WORKING WITH A LOT OF WEALTHY PEOPLE.
21 YOU CAN INTRODUCE THEM TO TRUST CAPABILITIES.
22 THE SYSTEMS ARE RANKED.
23 YOU CAN SEE THE TRUST ASSETS.
24 YOU CAN HELP MANAGE THAT, AND IT GIVES A SINGLE
25 POINT OF CONTACT FOR THE CLIENT, AND IT GIVES THE
23
1 CLIENT, IF YOU WILL, A TRUST BUSINESS THAT WE'VE
2 BEEN IN FOR HUNDREDS -- WELL, NOT HUNDREDS OF
3 YEARS BUT DECADES.
4 WE ALREADY PUT ABOUT 1.5 BILLION OF ASSETS ON THE
5 BOOKS THROUGH THE BROKERAGE CHANNELS, AND THERE'S
6 THE PRIVATE CAPITAL MANAGEMENT OFFICES WHERE WE
7 HAVE 300 RELATIONSHIP MANAGERS ACROSS THE
8 COUNTRY.
9 WE LAUNCHED AN AREA CALLED CALIBRE HERE IN JUNE
10 FOR THE ULTRA NET WORTH, HIGH NET WORTH TYPE OF
11 GROUP, AND THERE'S WHERE YOU WILL BE FOCUSING
12 MORE AND MORE ON THE PLETHORA OF AGGREGATING
13 SERVICES. THIS IS WHERE THE TECHNOLOGY CAN COME
14 INTO PLAY IN CONJUNCTION WITH THE ASSET
15 MANAGEMENT SERVICES AND THE LENDING SERVICES OF
16 THE BANK.
17 IF THAT'S DISTRIBUTION, THINK ABOUT PRODUCT
18 CAPABILITY FOR A MOMENT BECAUSE THE PRODUCT HELPS
19 YOU WITH THE WHOLE IDEA OF HOW YOU WILL DEVELOP
20 AND MAINTAIN CLIENTS.
21 IT ALSO IS GOING TO HELP YOU WITH YOUR
22 FINANCIALS, WHICH ARE VERY IMPORTANT TO US, AND,
23 OF COURSE, THE BIG ONE FOR US THAT WE REALLY
24 WANTED TO DEVELOP WAS ASSET MANAGEMENT, AND SO,
25 TODAY, AGAIN, $168-$170 BILLION RANGE OF ASSETS
24
1 UNDER MANAGEMENT AND MUTUAL FUNDS.
2 WE'RE A PLAYER IN THE INSTITUTIONAL MARKET AND
3 THE HIGH NET WORTH MARKET.
4 A COUPLE OTHER AREAS TO MENTION.
5 THE WRAP ACCOUNT AREA, AND WE HAVE A WRAP PROGRAM
6 CALLED MASTERS THAT ALLOWS US TO NAME MONEY
7 MANAGERS IN A WRAP TYPE OF FORMAT.
8 WE HAVE A FUND SOURCE WHICH ALLOWS YOU TO WRAP
9 MONEY MANAGEMENT TOGETHER WITH MUTUAL FUNDS, AND
10 WE HAVE HIGH PLUS THAT ALLOWS THE CLIENT TO HAVE
11 UNLIMITED TRADING, FINANCIAL ADVISER, WRAP
12 PRODUCTS, ET CETERA.
13 OUR PERSONAL TRUST AREA WITH 53,000 ACCOUNTS
14 MAKES IT THE FOURTH LARGEST IN THE TRUST AREA AS
15 FAR AS PERSONAL TRUST ACCOUNTS ARE CONCERNED.
16 WE'VE TALKED TO YOU A LITTLE BIT ABOUT THE
17 FOOTPRINT WE HAVE THERE.
18 INSURANCE AND ANNUITIES, I WILL QUICKLY SAY, THE
19 WHOLE INSURANCE AREA IS SOMETHING THAT I THINK IS
20 A VERY IMPORTANT KEY TO OUR STRATEGY, NOT JUST
21 WITH THE SUCCESS THAT WE'VE HAD WITH FIXED
22 ANNUITIES OR VARIABLE ANNUITIES, BUT THE WHOLE
23 INSURANCE PLATFORM.
24 ONE OF THE FIRST THINGS YOU WILL FIND OUT WHEN
25 AND IF YOU EVER DECIDE TO DO AN ESTATE PLAN IS
25
1 THE IMPORTANCE OF INSURANCE AND HELPING WITH THE
2 TAX STRATEGIES, CREATING CASH FLOW, ESPECIALLY IF
3 YOU MANAGE YOUR OWN BUSINESS, HAVE A FARM,
4 INSURANCE PLAYS A KEY ROLE.
5 INSURANCE STRATEGY IS IMPORTANT TO THE
6 DEVELOPMENT OF THE SWEET SPOT FOR US IN THE
7 COMMERCIAL SMALL BUSINESS BANKING SERVICES.
8 THE AMA IS A VERY LARGE ACCOUNT BASE FOR US.
9 THAT'S BASICALLY A BANKING AND BROKERAGE
10 TOGETHER.
11 THE BROKERAGE INDUSTRY REALLY LAUNCHED AND
12 STARTED THAT YEARS AGO, WITH TAKING BROKERAGE AND
13 TRYING TO ADD BANKING TO IT.
14 WE DID IT FROM REVERSE.
15 WE TOOK A BANKING PLATFORM, AND ADDED BROKERAGE
16 TO IT, AND THAT'S BECOME A STRONG SERVICE FOR US,
17 AND THEN THE 401(K), WHICH WE PROBABLY WON'T HAVE
18 TIME TO DEVELOP IN ANY STRONG FORMAT, IS THAT WE'RE
19 ALSO VERY SERIOUS ABOUT THAT BUSINESS.
20 WE HAVE ABOUT $18 BILLION UNDER ADMINISTRATION.
21 WE USE AN OPEN ARCHITECTURE IN TERMS OF USING
22 MANY ASSET FIRMS IN THE ROOM TODAY, BUT WE ALSO
23 HIGHLIGHT EVERGREEN FUNDS AS BEING ONE OF THE
24 ALTERNATIVES THAT YOU CAN CHOOSE.
25 WE SERVICE ABOUT 400,000 PARTICIPANTS.
26
1 WE'RE WEB ENABLED AND HAVE THE FULL SERVICE
2 RECORD KEEPING AN THE LIKE, AND THE REAL SECRET
3 IN THAT BUSINESS I THINK IS, A, NOT ONLY RUNNING
4 THAT BUSINESS RIGHT, AND YOU HAVE TO RUN IT RIGHT
5 BECAUSE YOU DON'T MAKE MONEY OFF OF PURE 401(K)
6 ADMINISTRATION. IT HAS TO BE ASSET MANAGEMENT
7 CHOICES, BUT, IT WILL BE THE TURNOVER OF THE
8 INDIVIDUALS WITHIN THAT 401(K) PLAN.
9 WHETHER IT BE RETIREMENT, WHETHER IT BE
10 RESTRUCTURING FROM CORPORATIONS AN THE LIKE, AND,
11 TODAY, WE'RE ACTUALLY CAPTURING ABOUT 30% OF
12 THOSE ASSETS AS AN INDIVIDUAL COMES OUT OF A
13 401(K) PLAN. MANY TIMES WHAT THEY NEED IS ADVICE
14 WITH OUR NATIONAL BROKERAGE FIRM.
15 WE CAN GIVE THEM THE ADVICE.
16 WE'VE GOT THE ROLLOVER PRODUCTS, AND OF COURSE,
17 MANY TIMES, IF YOU DON'T MAKE YOUR CAREER IN THIS
18 INDUSTRY, YOU'RE JUST NOT AWARE OF THINGS, LIKE
19 YOU CAN'T TAKE YOUR 401(K) MONEY OUT IF YOU ARE
20 SUBJECT TO A LOT OF TAXATION AND THE LIKE.
21 MANY TIMES PEOPLE SAY, YEAH, BUT AN INDIVIDUAL'S
22 ONLY RETIRING WITH $30,000.
23 I KNOW THAT'S A NICE ACCOUNT, BUT IS THAT WORTH
24 IT?
25 BUT WHAT YOU FIND OUT IS THAT THESE INDIVIDUALS
27
1 MAY BE WORTH A LOT MORE BECAUSE THEY HAVE ASSETS
2 OF WEALTH IN OTHER AREAS, OR MAYBE THEY'RE
3 MARRIED AND HAVE A MATE OR PARTNER THAT HAS A LOT
4 OF WEALTH, AND THEY NEVER GOT AROUND IN THEIR
5 BUSY CAREERS TO DO THE FINANCIAL PLANNING THAT
6 THEY NEED.
7 LET ME MOVE ON TO ASSET MANAGEMENT BECAUSE IT'S
8 SO CRUCIAL TO US.
9 WHAT WE WOULD BE IS I WOULD CALL US A VERY STRONG
10 BALANCED MANAGER.
11 WE HAVE BALANCED MANAGEMENT IN TERMS OF ASSET
12 DISTRIBUTION SYSTEMS, AND IN EFFECT, WE HAVE A
13 BALANCE HERE WHEN YOU LOOK AT IT.
14 I'M NOT REFERRING TO THE SPECIFIC STYLE OF
15 INVESTMENT.
16 I'M SAYING LOOK AT HOW WE BREAK THIS DOWN.
17 FOR EXAMPLE, THE $168 BILLION. WE HAVE ROUGHLY
18 $87 BILLION IN MUTUAL FUND FORMAT, AND $81
19 BILLION IN A SEPARATE ACCOUNT FORMAT.
20 IF YOU BREAK THAT DOWN, WE HIT TWO DIFFERENT
21 MARKETS.
22 WE HIT THE INSTITUTIONAL MARKET WITH $43 BILLION
23 IN SEPARATE ACCOUNT MANAGEMENT, AND THE HIGH NET
24 WORTH TO ABOUT $38 BILLION OF ASSETS UNDER
25 MANAGEMENT.
28
1 IF YOU LOOK AT THE TOTAL HIGH, MANY TIMES WHEN
2 YOU LOOK AT A BANKING ORGANIZATION, YOU THINK OF
3 A FIRM THAT'S MAYBE DOMINATED WITH MONEY MARKET
4 FUND ASSETS, AND IN OUR CASE, WE'RE ACTUALLY
5 ABOUT A THIRD, 34% ARE EQUITY TYPE FUNDS, 28% ARE
6 IN FIXED INCOME FUNDS, AND 38% ARE IN MONEY
7 MARKET FUNDS SO WHAT WE'RE GOING TO HAVE IS A
8 ROCKETSHIP ENVIRONMENT OUT THERE.
9 WE'RE GOING TO TRAIL IN THE ASSET GROWTH, IF YOU
10 WILL, TO THE 100% EQUITY FIRMS, BUT IN SORT OF
11 THE TRUE TIME, IF YOU WILL, WE HAVE A NICE
12 BALANCE TO IT, SO WE HAVE DEFENSIVE
13 CHARACTERISTICS WHEN YOU GET INTO A MARKET LIKE
14 WE'RE IN AT THE MOMENT.
15 EVERGREEN HAS BEEN THE BRAND THAT WE HAVE
16 DEVELOPED IN THE MUTUAL FUND AREA.
17 VERY IMPORTANT THAT WE HAVE A BRAND IN THIS AREA.
18 IT SHOULD NOT BE TAKEN LIGHTLY THAT YOU CANNOT
19 USE THE NAME AND THE BRAND OF THE ORGANIZATION
20 BECAUSE THEN IT BECOMES A PROPRIETARY FUND.
21 WE RUN THIS AS A SEPARATE PLATFORM, AS A SEPARATE
22 BUSINESS, BUT PART OF OUR FAMILY.
23 THE GROWTH HAS BEEN SUBSTANTIAL, AND IT'S BEEN
24 THROUGH A COMBINATION OF ACQUISITIONS WHICH WE
25 PUT HERE ON THE LEFT.
29
1 MANY FOLKS WANT TO SORT OF ANALYZE THIS, SO YOU
2 HAVE A COMBINATION OF ACQUISITIONS.
3 ROUGHLY ABOUT $45, $46 BILLION, PUT INTO THAT SOME
4 CONVERSIONS OF TRUST FUNDS IN THE MUTUAL FUND
5 FORMAT, AND THEN YOU PUT TOGETHER SOME MARKET
6 APPRECIATION, AND THEN THE ORGANIC GROWTH THAT WE
7 DID, AND YOU END UP WITH $87 BILLION.
8 A KEY TO THIS, AGAIN, YOU HEARD THE ONENESS OF
9 BROKERAGE CHANNEL, THE ONENESS, IF YOU WILL, ON
10 RUNNING THE TRUST CHANNEL AND THE HIGH NET WORTH
11 CHANNEL, ONCE AGAIN, WE'VE GONE WITH THE ONENESS
12 HERE.
13 DESPITE ALL OF THESE ACQUISITIONS AND LOOKING
14 LIKE A LOT OF CHAOS IN MANY RESPECTS AT ANY GIVEN
15 DAY, WE ONLY HAVE ONE BOARD OF DIRECTORS.
16 AS WE BOUGHT COMPANIES, WE LAID OUT OUR STRATEGY
17 AS TO WHAT WE WERE TRYING TO DO WITH THE BOARDS.
18 THEY AGREED WITH IT.
19 WE HAVE ONE DISTRIBUTION EFFORT AND ONE
20 TECHNOLOGY PLATFORM, ET CETERA, AND THE ONE THING
21 THAT WE DO IF YOU GO FAR ENOUGH BACK IN MY
22 CAREER, I WAS MONEY MANAGER, RESEARCH DIRECTOR IN
23 THE LIKE, WE DON'T BELIEVE THAT ANY ONE LOCATION
24 HAS MAGIC WATER IN IT, AND EVERYBODY SHOULD MOVE
25 TO ONE BUILDING.
30
1 ASSET MANAGERS SHOULD BE WHERE THEY WANT TO BE,
2 WHERE THEY'RE HAPPY, WHERE THEY CAN MAKE GOOD
3 INVESTMENT DECISIONS, SO WE ALLOW OUR INVESTMENT
4 FOLKS TO LIVE WHERE THEY WANT TO LIVE, RUN MONEY
5 THE WAY THEIR STYLE IS SUPPOSED TO BE RUN.
6 WE JUST HAVE IT ALL TIED TOGETHER WITH ONE
7 PLATFORM AND ONE DISTRIBUTION, AND THAT'S
8 SOMETHING THAT, QUITE FRANKLY, VERY GOOD MONEY
9 MANAGERS LIKE BECAUSE THEY WANT TO RUN THE MONEY.
10 THEY DON'T WANT TO BE MESSING AROUND WITH
11 DISTRIBUTION DECISIONS AND TECHNOLOGIES AND THOSE
12 KINDS OF THINGS.
13 THE INSTITUTIONAL MARKET, AND I THINK I SHOWED
14 YOU ON AN EARLIER SLIDE, WE RUN AN ACCOUNT
15 BUSINESS OF $43 BILLION.
16 THERE'S PROBABLY CLOSE TO $80 SOME BILLION TOTAL
17 IF YOU CUT MUTUAL FUNDS THAT WE HAVE DEDICATED TO
18 THE INSTITUTIONAL MARKET.
19 IT'S A LARGE MARKET FOR US.
20 WE DEVELOPED A VERY BROAD SUITE OF PRODUCTS, AS
21 YOU CAN SEE BY THE EXHIBIT.
22 WE HAVE APPROXIMATELY 147 DEDICATED INVESTMENT
23 PROFESSIONALS ACROSS DIFFERENT STYLES.
24 AGAIN, THEY'LL GIVE ME THE HOOK IF I TRY TO GIVE
25 YOU A SALES PITCH FOR EACH AND EVERY ONE OF THESE
31
1 STYLES, BUT THEY ARE DOING A GREAT JOB, AND WE
2 HAVE, AGAIN, WITH INSIDE THIS ONE BRAND, WE HAVE
3 FIRMS LIKE TATTERSALL THAT IS AN EXCITING CORE
4 BOND FIXED INCOME MANAGER, AND WE USED THE
5 TATTERSALL NAME THERE, BECAUSE THE CONSULTANTS
6 KNOW THAT NAME AND THE INSTITUTIONAL MARKETS KNOW
7 THAT NAME, AND HAVING SAID THAT, WE HAVE STRONG
8 INSTITUTIONAL SKILL SETS THAT WE'VE GOT FROM
9 CERTAIN ACQUISITIONS THAT WE'VE DONE, AND IT
10 REALLY IS A STRONG BASE THAT WE THINK WILL BE
11 IMPORTANT IN THE FUTURE.
12 THE HIGH NET WORTH PLATFORM, ABOUT $38 BILLION AS
13 I SAID EARLIER IN SEPARATE ACCOUNTS.
14 IF YOU INCLUDE THE MUTUAL FUNDS WHICH A LOT OF
15 THOSE ARE MUNICIPAL FUNDS AN THE LIKE WHICH HELP
16 WITH SOME OF THE TAX STRATEGIES AND SO FORTH OF
17 THESE INDIVIDUALS, AND WE HAVE $45 BILLION WORTH
18 OF ASSETS.
19 312 DEDICATED INVESTMENT PROFESSIONALS.
20 WE HAVE INVESTMENT PROFESSIONALS ACROSS OUR
21 FOOTPRINT WITH THIS TYPE OF BUSINESS.
22 OF THE HIGH NET WORTH INDIVIDUALS, AN THE LIKE,
23 LIKE TO SEE THEIR PORTFOLIO MANAGERS AND LIKE
24 THAT LOCAL TOUCH, IF YOU WILL.
25 ONCE AGAIN, IT'S ONE INVESTMENT PLATFORM, ONE
32
1 CHIEF INVESTMENT OFFICER AND ONE TECHNOLOGY
2 OFFICER, 42 OFFICES, 10 STATES AND A BROAD RANGE
3 OF PRODUCTS.
4 INCLUDING ALTERNATIVE INVESTMENTS AND OPEN
5 ARCHITECTURE TO BRING UNDER STYLES OF MONEY
6 MANAGEMENT IN WHAT WE DON'T SPECIALIZE IN THAT
7 WHAT THE CLIENTS MIGHT WANT.
8 TO SUMMARIZE, OUR ASSET GROWTH MANAGEMENT PLANS
9 ARE WE WANT TO LEVERAGE THE BANK PLATFORM, WE WANT
10 TO OFFER THESE SERVICES THROUGH THE BROKERAGE
11 PLATFORM.
12 WE HAVE THE WEALTH MANAGEMENT PLATFORM.
13 WE HAVE DIFFERENT TYPES OF CAPABILITIES, RETAIL,
14 HIGH NET WORTH, EVEN 401(K).
15 AND WE WANT TO CONTINUE TO OFFER AND ORIGINATE
16 PRODUCTS AND FEE-BASED SERVICES.
17 THE FEE-BASED PIECE IS SO IMPORTANT BECAUSE WHEN
18 YOU PUT THESE FEE-BASED SERVICES TOGETHER, YOU GO
19 BACK TO THE THAT RECURRING FEES ON THE BROKERAGE
20 SIDE, AND WHEN YOU PUT IT ALLTOGETHER, WE'RE OVER
21 100% OF RECURRING FEES THAT COVER THESE COSTS.
22 HIDDEN VALUE, WELL, WORKING FOR FIRST UNION OVER
23 THE LAST SEVEN YEARS, THERE'S JUST BEEN A LOT OF
24 STORIES.
25 THE BANKING STORIES CONTINUE TO BE THE DOMINANT
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1 STORY, BUT PART OF WHAT I'M TRYING TO DO TODAY IS
2 SAY WHAT WE DEVELOPED AND GROWN.
3 YOU'RE ALL IN ASSET MANAGEMENT FIRMS.
4 PUT YOUR KEY RATIOS UP THERE.
5 THESE ARE PUBLISHED P/E RATIOS.
6 ASSET MANAGEMENT FIRMS IN THE 20s.
7 WEALTH COMPANIES, MID-20s.
8 BROKERAGE FIRMS, 15.
9 THEN COMPARE THE MULTIPLES PUT ON GENERAL BANKING
10 ORGANIZATIONS.
11 WHAT WE'RE TRYING TO DO IS BUILD A REAL BALANCE
12 THAT WILL BLEND THAT TOGETHER, AND I THINK THIS
13 IS A LOT OF HIDDEN VALUE THAT WILL ULTIMATELY BE
14 UNDERSTOOD AND BECOME KNOWN THROUGH TIME BECAUSE
15 WE HAVE REACHED THAT CRITICAL SCALE.
16 WE HAVE REACHED THAT PLACE THAT WE CAN LEVERAGE
17 GOING FORWARD.
18 IT'S A WELL POSITIONED MULTICHANNEL.
19 IT'S NATIONAL.
20 WE'RE NOT JUST AN EAST COAST BANK.
21 WE HAVE A BROAD SPECTRUM OF PRODUCT, PROVEN TRACK
22 RECORD, AND ALL OF THIS IS FOCUSED ON HIGHER P/E
23 BUSINESSES.
24 AT LEAST HIGHER P/E BUSINESSES RELATIVE TO A
25 GENERAL BANKING PLATFORM.
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1 FINALLY, SINCE THERE'S SO MUCH GOING ON IN OUR
2 COMPANY, THIS IS THE REASON FOR THE PRECAUTIONARY
3 STATEMENT.
4 THE ONE QUESTION THAT FOLKS ASK ME THAT I CAN'T
5 ANSWER IS, IF YOU LOOK AT WHAT'S GOING ON TODAY,
6 IN CASE YOU MISSED IT, THERE'S A PROPOSED MERGER
7 WITH THE WACHOVIA TEAM, AND IF YOU LOOK AT WHAT
8 THEY HAVE IN SOME OF THESE BUSINESSES, YOU CAN
9 SEE THE ADDED STRENGTH THAT WE WILL HAVE BOTH FOR
10 WACHOVIA CLIENTS AND FOR OURSELVES.
11 THERE'S OUR CAUTIONARY STATEMENT, AGAIN, I REFER
12 YOU TO THAT.
13 LET ME NOW TURN IT OVER TO YOU FOR QUESTIONS.
14 >> THANK YOU FOR REMINDING US OF THE CAUTIONARY
15 STATEMENT. I'M CURIOUS.
16 IT'S A MORE DIFFICULT MARKET AND INVESTING
17 ENVIRONMENT HERE TODAY.
18 IS THERE A DIFFERENCE IN THE BUYING PATTERNS
19 BETWEEN CUSTOMERS IN THE BANK CHANNEL AND THE
20 BROKERAGE CHANNEL?
21 >> DON: WHAT YOU SEE AT THE END OF THE DAY IS
22 THERE'S MORE SIMILARITIES THAN THERE'S
23 DIFFERENCES.
24 A LOT OF THAT DEFINITION, IF YOU WILL, IS WHAT
25 THE CLIENTS SEE THEMSELVES, WHERE THEY MIGHT
35
1 PARTICULARLY GO FOR BUSINESS, BUT I THINK THE
2 GENERAL TRENDS WOULD BE THE SAME.
3 THE MAJOR DIFFERENCE WE HAVE IN THE BANKING
4 CHANNEL, THOUGH, FROM AN INVESTMENT OPPORTUNITY
5 POINT OF VIEW IS SO MANY OF THESE INDIVIDUALS
6 HAVE NOT STARTED THEIR INVESTMENT PROGRAMS.
7 THEY KNOW THEY NEED TO START.
8 THEY'RE BUSY.
9 THEY'RE NOT SURE THEY HAVE THE WEALTH OR KNOW, IF
10 YOU WILL, WHERE TO GET THE TIME TO STUDY UP ON
11 INVESTMENTS, FIND A BROKERAGE FIRM AN THE LIKE,
12 SO WHAT WE HAVE EXPERIENCED IS MORE OF A MASS
13 MARKET TYPE OF DEVELOPMENT WHERE WE INTRODUCE
14 PEOPLE FOR THE FIRST TIME TO ANNUITIES, FIXED
15 ANNUITIES, VARIABLE ANNUITIES.
16 THEY'RE STARTING THAT FIRST MUTUAL FUND
17 INVESTMENT PROGRAM, AND THAT'S A REAL NICE
18 CHARACTERISTIC TO HAVE, AND QUITE FRANKLY, THE
19 EASE AND THE BENEFIT OF HAVING THAT AT ONE
20 ORGANIZATION, WE CAN DO YOUR BANKING BUSINESS AND
21 START YOUR INVESTMENT BUSINESS, IS EXCELLENT, AND
22 THEN AS WE DEVELOPED OUT THE SERIES SEVEN
23 PLATFORM WITHIN THE BANK, TODAY, I THINK OUR
24 AVERAGE ADVISER IN THE BANK HAS 15, 16 YEARS OF
25 EXPERIENCE, AND WE'RE NOW ATTRACTING EFFECTIVELY
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1 THE CHARACTERISTICS THAT YOU WOULD SEE IN THE
2 OUT-OF-BANK CHANNEL.
3 [ INAUDIBLE QUESTION ]
4 >> DON: ON THE FIRST QUESTION IN TERMS OF HOW TO
5 TAP THE BANK CHANNEL, IT'S A COMBINATION OF
6 THINGS, AND THE SLIDE I HAD BACK THERE, -- AND I
7 WON'T GO BACK TO IT -- IT'S WHAT WE'RE CALLING
8 GOLD CENTERS THAT WILL BE THE FIRST MAJOR THRUST
9 IN TRYING TO DO THAT.
10 THE GOLD CENTERS, WE LOOKED AT THE BRANCHES.
11 WE LOOKED AT WHERE THEY'RE LOCATED.
12 WE LOOKED AT THE 172,000 CLIENT LIST, AND SAID,
13 OKAY, IF YOU LOOK AT THESE AREAS, AND OUR GOAL
14 SOME DAY WILL BE TO GET TO 100, BUT WE'RE
15 STARTING WITH 25.
16 THESE ARE AREAS WHERE WE KNOW THOSE TYPES OF
17 CLIENTS ARE COMING THROUGH THE DOOR, AND THEY
18 HAVE THAT KIND OF CAPABILITY RIGHT THERE ON THE
19 SPOT THAT THEY CAN MEET AND CHAT WITH FOLKS,
20 ESTATE PLANNERS, ASSET MANAGERS, ET CETERA,
21 INSURANCE SPECIALISTS, TRUST SPECIALISTS.
22 THIS WE FEEL IS HOW WE'RE REALLY GOING TO TAP IT,
23 AND MY PARTNER, BEN JENKINS, WHO RUNS THE GENERAL
24 BANK, IS VERY SUPPORTIVE OF THAT, BECAUSE WHEN
25 YOU GO BACK TO LOOK AT THE PRIVATE CAPITAL GROUP
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1 WE HAVE TODAY, WE ALREADY HAVE 60,000 CLIENTS
2 INAUDIBLE, AND WHEN YOU LOOK AT THOSE
3 CLIENTS, THEY'RE TERRIFIC BANKING CLIENTS.
4 THEY HAVE MORE DEPOSITS.
5 THEY GROW DEPOSITS.
6 THEY HAVE GOOD LOANS WITH US.
7 THEY'RE A GREAT CREDIT RISK.
8 MANY OF THESE PEOPLE RUN BUSINESSES, RUN LAW
9 FIRMS, ET CETERA, SO FROM A GENERAL BANKING
10 INTEREST POINT OF VIEW, IT'S IN THEIR INTEREST
11 ALSO TO WANT TO INTRODUCE THEIR CUSTOMERS TO
12 THESE KINDS OF SERVICES BECAUSE IT HELPS BUILD
13 THAT WHOLE RELATIONSHIP.
14 ON THE INSURANCE SIDE, THE QUESTION OF THE
15 ECONOMICS, THEREIN, AN THE LIKE, IS FROM FIRST
16 UNION'S POINT OF VIEW, WE'RE NOT INTERESTED IN
17 ACQUIRING INSURANCE COMPANIES.
18 WE DON'T THINK FOR US THAT WOULD BE THE WAY WE
19 COULD MAXIMIZE THE USE OF OUR CAPITAL.
20 UNDERWRITING THE PRODUCTS, WE DON'T NEED TO DO.
21 WE'RE A DISTRIBUTOR.
22 INSURANCE PRODUCTS PLAY A ROLE IN ALL OF OUR
23 CLIENTS' LIVES, WHETHER IT BE THE INDIVIDUAL
24 FROM, AGAIN, I KEEP GOING BACK TO THE ESTATE TAX
25 AND THE LIKE, THE ANNUITIES, ET CETERA, RIGHT
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1 THROUGH THE COMMERCIAL AGENCIES AND SO FORTH, SO
2 FOR US, WE CAN PARTICIPATE IN THE DISTRIBUTION
3 PROFITS, WHICH IS WHAT WE'RE ALL GOOD ABOUT.
4 AND SECOND OF ALL, WE USED OUR MASS AND SCALE,
5 THAT IN A LOT OF THE ANNUITIES WE ARE A
6 CO-ADVISER AND MANAGE A LOT OF THE MONEY.
7 WE DO THAT ANYWAY FOR A LIVING, SO WE CAN SHARE
8 IN SOME OF THE ASSET MANAGEMENT ECONOMICS, BUT TO
9 GET INTO THE UNDERWRITING WOULD BE A USE OF
10 CAPITAL, AT LEAST FROM OUR STRATEGY, WE DON'T SEE
11 THAT THAT MAKES SENSE.
12 >> CAN I FOLLOW UP ON THAT? YOU DEVELOPED
13 INCREASING CONFIDENCE IN YOUR ABILITY TO
14 DISTRIBUTE PRODUCTS THROUGH THE BROKERAGE
15 CHANNEL, WHICH IS A RELATIVELY NEW CHANNEL FOR
16 YOU.
17 WOULD THAT GIVE YOU MORE CONFIDENCE TO CROSS-SELL
18 FROM THE LIFE INSURANCE CHANNEL NOT BEING A
19 MANUFACTURER?
20 >> DON: YES, WE COULD DO THAT IN ADDITION TO THE
21 LIFE INSURANCE BUSINESSES THAT WE WHOLESALE TO
22 AND TALK TO THROUGH OUR MUTUAL FUND GROUP TODAY,
23 AND THE COMMERCIAL AGENCY SIDE, IF YOU FOLLOW US,
24 WE MADE A NUMBER OF SMALL ACQUISITIONS IN
25 COMMERCIAL AGENCIES, THE AGENCY UP IN NEW JERSEY
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1 AREA FOR EXAMPLE; AND, AGAIN, WE HAVE A CLASSIC
2 SITUATION WHERE YOU HAVE INDIVIDUALS WHO MADE
3 THEIR CAREER WITH ONE SET OF PRODUCTS, IN THIS
4 CASE, COMMERCIAL INSURANCE, AND WE CAN NOW LINK
5 EVERYTHING TOGETHER.
6 OUR GOAL IS ANY SERVICE THAT WE HAVE AT FIRST
7 UNION, WE WANT WHOEVER IS DEALING WITH THE CLIENT
8 TO BE ABLE TO BRING ALL OF THAT THROUGH, AND WE
9 ALREADY HAD TREMENDOUS CROSS-SELL SUCCESSES
10 BECAUSE THE CLIENTS OF THESE COMMERCIAL AGENCIES
11 KNOW AND TRUST THESE PEOPLE.
12 THEY KNOW WHEN THEY NEED SOME OF THEIR BANKING
13 SERVICES OR ASSET SERVICES.
14 Q. YOU LET YOUR MONEY MANAGERS MOVE ANYWHERE
15 THEY WANT.
16 [ INAUDIBLE ]
17 WHAT ARE YOUR RULES IN HOW YOU GOVERN THAT?
18 >> Don:: THAT'S WHY IT'S HELPFUL TO HAVE ONE
19 SALES STRUCTURE FOR THE MANAGEMENT SIDE BECAUSE
20 IT'S A DIFFICULT TASK.
21 EVERYBODY WANTS TO SEE THE MONEY MANAGERS.
22 WE BASICALLY SAT DOWN AND NEGOTIATED, IF YOU
23 WILL, WHAT WOULD BE A REASONABLE AMOUNT OF TIME
24 FOR A MANAGER TO BE AWAY BECAUSE YOU CAN'T GO
25 INTO ESPECIALLY THE EXTERNAL BROKERAGE CHANNELS,
40
1 WHICH BY THE WAY, WE SELL ABOUT AS MUCH EVERGREEN
2 FUND THROUGH A LOT OF THE PARTNERS IN THE ROOM
3 TODAY TO WHAT I WOULD CALL EXTERNAL CHANNEL THAN
4 WE MADE THROUGH FIRST UNION-OWNED CHANNEL, AND WE
5 TRY TO FIGURE OUT THE AMOUNT OF TIME THAT A
6 PORTFOLIO MANAGER COULD BE AWAY, AND THEN ARE
7 AHEAD OF THAT WHOLE DISTRIBUTION SIDE.
8 IT'S LIKE A LIMITED QUANTITY TO GET THE MANAGER
9 SO MUCH.
10 IF YOU WERE A MANAGER OF A CERTAIN FUND, AND YOU
11 WERE CHOSEN TO SPEAK TO A MORGAN STANLEY MEETING,
12 SO BE IT, YOU MAY NOT BE AVAILABLE FOR ANOTHER
13 MEETING. IT'S A BALANCING ACT.
14 YOU'VE GOT TO PROTECT YOUR ASSET MANAGERS.
15 MAYBE THIS IS MY OLD ASSET MANAGEMENT BACKGROUND
16 COMING THROUGH, BUT YOUR JOB IS REALLY TO MANAGE
17 ASSETS, AND THAT'S WHAT WE LET THEM DO.
18 >> DON, THANK YOU.
19 >>DON: THANK YOU VERY MUCH. APPRECIATE YOUR
20 TIME.
21 THANK YOU.
22 [ APPLAUSE ]
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