HOW WEBSTER BANK
ENERGIZED ITS SALES REP PERFORMANCE
Cover Story
Andrew Singer

IT ISN'T ALWAYS EASY to get investment sales reps to attend sales meetings. The more successful reps, in fact, are more likely to think they have "all the answers," suggests Thomas N. Howe, president of Webster Investment Services (Kensington, CT), and be loathe to show up for such gatherings. They'd rather use the time for selling.

How to solve the conundrum?

Two years ago, a light bulb went off at Webster Investment Services (WIS). Henceforth, sales meetings with Webster's 40-plus financial consultants (FCs) would focus "100 percent on sales" with a concentration on success stories, recalls Howe. Other matters, like compliance or compensation would be dealt with separately, in a telephone conference call.

Most interesting: Presentations at the monthly meetings would be made by senior reps themselves.

At one recent gathering, for instance, Webster's top rep spoke about the client reviews he was conducting with clients who had suffered stock market losses. How did he reassure his clients? Encourage them? "When the top rep provides these types of recommendations, it's not the same as when it comes from management," says Howe.

In February, WIS' third leading rep (based on year-to-date GDC) described his recent work with attorneys—how and why he's able to add value to their work, particularly when it comes to settling estates. The rep had reaped quality client referrals and developed new relationships and opportunities. "This has worked for me," he told the gathering.

WIS program revenues grew in 2008, and they are expected to keep increasing in 2009 despite the overall economic crisis. The 44-rep sales force should expand to 49 by June.

Another rep spoke recently about how she kept herself organized, recalls WIS sales manager John Olerio, with regard to things like paperwork. In this way, she freed up more time to sell. This individual had a reputation as a very organized person. Her peers eagerly jotted down her organizational tips.

Since Webster has gone to this format, the "meetings are more impactful, a more relevant experience," says Howe. The reps often emerge from the meetings "energized."

Regional Bank 'Program of the Year'

Whether all this has resulted in more dollars flowing to the bottom line is difficult to say. But brokerage program revenues at Webster have grown at a 10 percent annual compounded rate in recent years, and in March, the Bank Insurance and Securities Association (BISA) named Webster Investment Services its Regional Institution Program of the Year.

Webster Investment Services is part of Webster Bank, the principal operating subsidiary of Webster Financial Services, a $17.6 billion bank holding company based in Waterbury, CT. (Waterbury's Palace Theater, of which Webster is a sponsor, is featured on the cover of this issue and the photo opposite.)

Not all of Webster Investment Service's sales meeting presentations run like clockwork, of course. "Sometimes someone drops the ball," concedes Howe. Before a meeting, Howe and Olerio make an effort to get their presenters "teed up properly." Olerio conducts a brief, informal discussion with the presenter—making sure he or she is prepared, has a clear notion of what he wants to say, and understands the audience and its expectations.

Growth anticipated in 2009

WIS program revenues grew in 2008, and they are expected to keep increasing in 2009 despite the overall economic crisis. The 44-rep sales force should increase to 49 by June 1, 2009. "Our plan is to grow revenue in 2009," says Howe. Given economic conditions, he would be satisfied with 5 percent revenue growth in 2009 and 10 percent sales growth—well below recent annual growth rates, but not bad in a flagging economy.

Traditionally, Webster's product mix has been about 40-45 percent mutual funds, with the balance split about evenly between fixed annuities and variable annuities. This year, given the tumult in the stock market, the fixed annuity component is much larger, the mutual fund component lower.

Mutual fund production virtually collapsed in some bank programs in late 2008 and early 2009, but it accounted for 35 percent of production at Webster in 2008 (full year). Much of that was in fixed-income funds, however, not equity funds.

In the first quarter of 2009, mutual fund share was still at 30 percent, historically low, but well above the funds share at some other bank programs, which have plummeted below 10 percent in instances. Fixed annuities were 50 percent of volume in the first quarter of 2009—a new high.

Individual fixed-income securities now account for 7-8 percent of business, says Howe. Life insurance has yet to make much of a mark. "We're in a growth market with life insurance; we're still not where we want to be."

There's also been a "minor uptick" in managed money. Webster, like other banks, is seeking to develop more fee-based business. Seasoned reps—those with more than five years experience—have fee-based licenses (Series 65/66). Among top reps, a significant portion of business is now fee-based. This is no surprise. "It's more of a challenge for someone struggling to put bread on the table," i.e., less experienced reps, to move to a fee-based business, observes Howe. The bank is helping those reps to make this transition, paying a premium for first-year fee-based business.

About 15 percent of business is fee-based, says Howe, adding that Webster Investment Services will be lucky to maintain that share given the current state of the economy. Eventually, however, Howe would like to see 30-40 percent of revenues from fee-based business.

Where do their fee-based revenues come from? C-shares, variable annuities with trail income, and the bank's growing RIA (registered investment advisor) business, Howe answers.

When one rep described an idea at a sales meeting recently, 'I saw 40 reps write in down.'

A team approach

Webster takes a team approach to investment sales. Back in 2004, recalls Howe, WIS was looking for ways to improve overall growth. A team structure was viewed as the best way to leverage the knowledge and skills of their top reps. Webster teamed six new, relatively inexperienced reps with senior reps.

"It's a very successful model for us," says Howe. Many of those 'new' reps from 2004 have since become senior financial consultants.

Webster has 17 sales teams. Each typically includes a senior FC, one or two regular FCs, and three to six LBEs (licensed bank employees). Six to eight individuals typically serve on a team.

Webster is increasing its junior broker program, too. It currently has five junior brokers spread among the 17 teams. The number of junior brokers will rise to 10 by June 1, 2009.

All team members sell. Senior FCs mentor other FCs, junior brokers, and LBEs, but they do not directly supervise team members. That would be going too far. "Just because you're a successful sales rep, doesn't mean you're able to manage anything," notes Howe. Sales skills and management skills are different.

Senior FCs receive an override on all team production. In addition, each team member is eligible for a quarterly bonus based on team production. Every team member receives the bonus or no team member gets the bonus. The emphasis obviously is on achieving team goals. Still, the team bonus is not enormous—less than 5 percent of a rep's annual total compensation, typically. Most rep compensation still comes from personal production.

Each team operates in a loosely defined geographic area. The senior FC and another team FC might operate in contiguous areas. The senior consultant typically works with one to three branches, the regular FC with four or five branches.

In the first two weeks of February, the teams spent two hours with Howe and Olerio at WIS headquarters. Webster tracks many things: revenues, average principal per sale, average revenues per sale, number of prospect appointments, conversion rates, how many telemarketing outbound calls are made each day, etc. At these meetings the teams stated in their own words what their team would accomplish. At that time, "We were able to share best practices with the teams," recalls Howe.

Webster's reps also receive semi-annual report cards that list total sales, revenues, appointments at each branch, product mix, LBE success, success of other people on their teams, and so on. This provides a comprehensive look at their performance.

A trimmed down LBE program

One area that Webster Investment Services is not expanding is its LBE program. It was pared down in 2008. The number of licensed platform bankers fell from 100 earlier to 42 by August 2008. Many had life and health insurance licenses but weren't selling anything.

LBEs tend to follow the 80/20 rule, notes Howe, whereby 20 percent of the people generate 80 percent of the sales. Given today's straitened economic circumstances, more LBEs are focusing on their bank duties, too. Webster Bank needs to optimize staffing in its branches. Unless platform personnel are really productive, they aren't going to be selling fixed annuities or mutual funds.

It's "an efficiency play," explains Howe. The 38 current LBEs are split between those that have life and health insurance licenses only and sell fixed annuities and life insurance (term life and single premium life), and those that also have Series 6 licenses and sell mutual funds as well.

Referring back to the bank

Branch referrals are usually viewed as critical for the success of a bank-brokerage program, but in order to get referrals you often have to give referrals.

"You have to be brain dead if you don't understand how important it is to help your branch partners achieve their goals," says Howe, particularly these days when banks are looking to boost low-cost deposits, like non-interest-bearing checking accounts.

Webster has an automated system that tracks referrals. Each time a WIS rep passes business back to the bank, the referral is entered into the system. A drop-down screen displays the name of the originator of this account.

Using a tracking mechanism that tallies referrals back to the branches can make a big difference, Howe suggests. It isn't just the brokerage program saying, 'We sent x-number of referrals back to the branches.' It is the bank itself validating those numbers.

The referrals pace has been picking up. There were more of these referrals in the first two months of 2009 than in the last six months of 2008.

Hiring junior brokers

As noted, WIS will be hiring in 2009. Is this a good time to hire reps? "It's a good time for us," says Olerio, although he adds most of the new hires will be associate brokers—not senior wirehouse reps—who will allow their senior reps to segment their books and focus more on their top clients. They began the associate broker (junior broker) program in September 2008.

Still, "banks look good now" to many financial advisors, says Olerio. "They're a great place for someone to begin."

Webster isn't only looking outside for junior brokers. Half of the new hires are expected to be LBEs or sales assistants already in the Webster program.

The company likes the idea of promoting from within. WIS has long run a summer intern program. Interns are assigned to reps in the field. Their salary is paid by the reps themselves. Six or seven former summer interns are now full-time Webster employees.

Webster's retail investments program began in the early 1990s; the bank worked initially with IFMG, the third-party marketing firm. Howe arrived in early 1998 from Fleet Financial Group. In 1999, Webster formed its own broker-dealer (B/D).

Since Webster has gone to the new format, the 'meetings are more impactful, a more relevant experience.' The reps often emerge from the meetings 'energized.'

In 2007, Webster gave up its B/D and began outsourcing through Uvest/LPL. Why relinquish the B/D? The compliance and technology expenses had become difficult to bear. With Uvest/LPL, they've been able to increase their sales growth rate, lower compliance expenses, and improve their income stream, with more revenue dropping to the bottom line, says Howe. They reduced their back office from 22 ½ people to four and a half people.

A clear understanding

Howe and Olerio were asked about the elements of a successful retail brokerage program. "The most important thing is that bank management has a clear understanding of the value brought to the bank by the investment program," says Howe. Without this, the program won't get cooperation and support from the branches.

How to foster such an understanding? Webster has conducted studies on this subject. It found that an investment services customer is twice as likely to grow deposits as other bank customers, and is only one-third as likely to leave the bank. And when WIS customers take bank dollars to buy investment products, they tend to replenish those deposits. "We've got data that supports how much more deeply in a client's wallet a bank gets with an investments program," says Howe.

WIS doesn't target non-interest-bearing checking accounts, but they will solicit Webster CD customers. The former represent the highly sought, low-cost, 'core' deposits—so they stand clear—but some CDs are barely profitable for the bank. Those funds are fair game.

Consistency among reps is a key element, too. One-third of Webster's reps have been with the bank for 10 years or more. "Our top reps don't typically leave," says Olerio. "Minimizing turnover [among reps] is critical to maintaining growth at a high level."

Webster Investment Services hasn't been afraid to try new things—to experiment now and them—and that hasn't hurt, either. Some things work, some don't, admits Howe.

The sales-meetings 'reformat' is a case in point. The rep presentations have been "extremely successful," said Howe at BISA's recent annual convention. When one rep described an idea at a sales meeting recently, "I saw 40 reps write it down." He knew it would be implemented widely throughout the sales force as a 'best practice.'

Overall, it's exciting for the rep chosen to act as a "diva" for the day, Howe adds. "We've worked hard to make the sales meetings a useful activity."