MM Client Retention s1

MM CLIENT RETENTION

"The Typettes, Fingers That Dance!" (212-505-6518) 1

MM Client Retention SS4 Call October 31, 2002 PRUDENTIAL INVESTMENTS MULTIMEDIA

RW: Good afternoon, everyone. Rich Woodworth(?) here in national sales, and as always, on Thursdays at 4:00 p.m. we have our managed money client retention call. We promoted this today in action daily. And with us today we have a few speakers. For one, we have Karen Heath(?) who is the director of the IMS Tech Center. Karen, thanks for joining us today. KH: Good afternoon. RW: Yeah, good afternoon. Katie Roof(?) also will be joining us. She's the metro regional technical analyst. Katie, thanks for joining us again. KR: Thank you. RW: I appreciate having you on the call as always. And we have our special guest financial advisors, Greg Kroner(?), directors council FA from our new Citi branch. Greg, thanks for joining us today. GK: Thank you. RW: All right. Now, we typically only have a good two or three speakers on the call. Today we have four, actually. And moderating it is going to be managed account coordinator for our midwest region, Chad Metzger(?). I'll turn the call over to Chad at this point. Chad, thanks for joining us and take it away. CM: All right, thanks Rich. Good afternoon everyone and happy Halloween. As introduced, I am Chad Metzger, MM CLIENT RETENTION

the managed account coordinator in the midwest region. And again, I'd like to welcome everybody to the managed money client retention SS4 call which as Rich mentioned we do do weekly on Thursdays at 4 p.m. eastern standard time, just to get our advertisement in there. Today's topic is going to be Let your Tech Analyst Help you Build and Retain Business. And I'm going to kind of reintroduce the speakers that Rich just introduced and give maybe a little bit more information about what they're going to talk about, and then I'll turn it over to them. First, Karen Heath, who was introduced as the director of the IMS tech sanner(?) ... tech center, excuse me ... is going to talk a little bit about the job of the tech analyst and the roles and responsibilities in kind of a 30,000 foot generic form. And then, she's going to turn it over to Katie Ruth(?) who is an actual tech analyst in the metro region. She's going to talk about some of her experiences as a tech analyst and how she works individually with financial advisors and branch managers in their daily business. And then finally, Greg Kroner as introduced ... FA out of the new Citi branch in the metro region. Hopefully, he'll introduce us just briefly to his business and how he works specifically with Katie in his region on an ongoing basis in his business, and how he views the tech analyst as an extension of his team in his business. So with that, I'd just like to start out with a few you know, thoughts on how I view the tech analysts in my region. I use them and refer F-As to them on a very regular basis. A few of the things that I use them for just generically are fund and manager recommendations. Anytime you have or need a recommendation on let's say a large cap growth manager with low turnover and low risk MM CLIENT RETENTION

relative to the rest of the peer group, they're an excellent source of information and can give great recommendations in that regard. Also, combinations as you're putting together asset allocations and have maybe a manager or two in mind that you want to work with and want to find out who has a low correlation that would work very well together with that manager or a couple managers. They're fantastic at that and they can run custom analytics in that regard as well. Asset allocation studies they can run for individual clients or perspective clients. They can do portfolio analysis on a current client's portfolio holdings and show how there's probably a better combination that we can come up with in one our managed account programs that will get them up to the efficient frontier to have a most efficient portfolio. Also, proposals, I use them for on a very regular basis. Lots of custom analytics that they can run and include in somewhat of a standard proposal that's very effective on both a retail end and institutional basis, I found. And NRFPs. A lot of people aren't aware that when you receive an RFP, you can get your tech analyst to help you put that together. And they've got kind of a database of the canned answers in a lot of generic situations where they can move through it very quickly and help you with that RFP. So with that, I'm going to turn it over to Karen Heath and she's going to get the guest speakers kicked off here. Karen? KH: Great. Thank you, Chad and good afternoon again everyone. You know, I just want to spend a couple of minutes to really give you an idea of really where these tech analysts can help MM CLIENT RETENTION

you do more sea-based(?) business and/or convert assets to recurring revenue solution. Really, the managed account(?) tech analysts are steps two and three of the consulting process. You know, the four step process, profiling, asset allocation, manned research(?) and selection and monitoring. The managed account tech analysts are really steps two and three. Customize asset allocation analysis that they can support you with, and also manage research and selection. If you have existing assets here at the firm or assets that could be away and you want to talk to the client about a comprehensive asset allocation, and then where the appropriate investment solutions ... it's the managed account tech analyst that can help you. I really position the tech analyst as the secret weapon kind of invented within managed account national sales. And the reason I say that is because they are the one team within the firm that is going to give you, the financial advisor, one on one attention in really figuring out the detail of what the client's existing portfolios are and what should be recommended. It's important that you get this kind of support, depending on especially the size of the portfolio, so that you are comfortable in what you're presenting to the client. And sometimes we find when they run customized asset allocations that your client is appropriately allocated, and that's a good thing. But also, we leverage the asset allocation that they produce as a conversation you have with your client. It's something that they can give you showing a current portfolio, recommended portfolio, so you can sit down with your client and/or prospect and talk about maybe some rebalancing or a different way to look at their portfolios. MM CLIENT RETENTION

Just to tell you about their bag of tricks, pretty much there are two software tools that the tech analysts use to deliver their proposal capabilities. We use Zeffer(?) software for the customized asset allocation which will show you the efficient frontier, the existing (Inaudible) client's current portfolio as well as recommended portfolios, and the supporting statistics around the allocations, as well as to use planned sponsor networks. Other known ... we call it PSN(?) or Effron(?), which is the manager database that we use to actually do the manager searches. I think what's kind of neat about this software is that many of the financial advisors that we work with also use it for competitive advantages. And what I mean by that ... depending if you're competing against a regional firm or a regional bank, if they report their numbers, we can show our max(?) managers and our proprietary funds against these other outside sources. So it's a great way to look at the fees that they're disclosing, the accounts that they have, the manager turn over and so forth. So really look at your managed account tech analyst as a resource. Someone there that's going to position themselves as part of your team to help you do more business. And really, if you just have questions about target per choice and max(?), really use them. They're there to help you guys one on one. So with that, I'm going to turn it over to Katie. I think we're lucky today that we actually have a tech analyst and a financial advisor that work closely together in really doing this type of business. So Katie, I'll turn it over to you. KR: Thanks, Karen. Hi, everyone. Again, my name is Katie Roof, and I am the tech analyst in the metro region. And just so everyone knows, all FAs throughout the entire country MM CLIENT RETENTION

have a tech analyst. And all the analysts are broken up. I'm one of nine tech analysts throughout the country, and we're all broken up by region. And if you go on the managed money website under the tech center tab, you can actually print out and see who your tech analyst and which person covers your region. And Chad and Karen both did a great job explaining what we do. And I just wanted to provide a quick example of what I've been doing recently, especially in this market. I am really right now finding that a lot of FAs whether it's in terms of client or process (BEEP) ... (Inaudible) they need a reason to pick up the phone and make a phone call. I've had a lot of FAs trying to compete for various accounts or just retain accounts. And so what I've been doing is working very closely with them and having them get me statements if the client or prospect has accounts in other companies, and/or if the client or prospect has accounts here, I get those account numbers. And I have a special system here which all the other tech analysts do as well, where I can input every single position in security and come out with a current allocation or a current analysis. And from there, I pick up the phone and I talk to the FA and we kind of ... it's almost like an x-ray of the current allocation. And we can see where any overweights or gaps are in the client or prospect's current allocation. And this provides a reason for the FA to pick up the phone and call the client or prospect. From there, we can work together to develop the most appropriate allocation, and this is you know, again through using the map system. And whether or not we want to use Pruchoice(?) target mast(?) or Pima(?). And really, MM CLIENT RETENTION

I've worked very closely with a lot of FAs in my region, and really I'm considered an important and integral part of their team. And one of the FAs that I've pretty much helped to transition a lot of his transactional business over to recurring revenue business, more on particular target (sic) is Greg Kroner from the new Citi branch. And what Greg is going to talk a little bit about is why he uses the target program, what his team does and/or focuses on and how they use me. And lastly, he's going to provide some tips on how to do target more effectively. So with that, I introduce Greg Kroner from new Citi. GK: Thank you and hello, everyone. We started using target because we wanted a recurring revenue sea-based business. And basically our business was transactional. And what we wanted was something that was ... could be shown to existing clients as well as to new prospects and target seemed to fit the bill for our type of clientele more than anything else. And as was previously mentioned, the steps made by people like Katie, and especially Katie have been very, very easy, because they've taken it from a four step process to my input mostly in the first step and the last step. Yes, I have a lot of input on how to do it, but with the software that they have and being able to sit there in front of a client and say, "This is what you've got," both in a pi chart or a visual way as well as with the numbers behind it, this is what you ought to have, it becomes a fairly easy task. The other thing that I think is incredibly important is that ... and it actually says so right in the brochure, is that it gives us a distinct advantage in our relationship with our client. All of the sudden, we're on the same page with them. We're in the MM CLIENT RETENTION

advice business, which is the business we were always in before, but we disguised it with a bunch of other things. That to me is an invaluable thing. No longer does a client ever question my motives behind doing it. I get rewarded on the success, and I participate in the failures. To me, that ... and the rest of my team, that's very important. The way we use Katie is fantastic. She mentioned a lot of before, but I'm out in the field, and I'm telling you, it really works. She can take an existing account. She can put it through the computers. She can show exactly what it has. We then show that to a client. We mail them off a questionnaire or do it with them personally. We make sure that they feel it out. That it's their wishes, not our wishes. We explain all of that to them. We take them through that process. We basically do it in a three step process. We answer the questionnaire. We then get a proposal for them. And then where we needed, we either tweak the proposal, i.e., a proposal might come out with too much in international equity for the personality that we're doing it with. And we might take some of that off and put it into large cap or something like that. But we'll come to an agreement. Now we've got a signed document that somebody has signed off on, which I think is an intricate part of the plan. The main reason we took target as opposed to the others, and the others are fine programs and we do participate in them ... but the main reason we went with target is because target fulfilled all that we trying to accomplish. Anything from a half a million dollar under to do proper asset allocations, target seemed to us to be the best program. Yes, it's true you could do target inside of Pru-choice, but we wanted MM CLIENT RETENTION

the discipline that came with target and didn't want to have to monitor the array of different mutual funds that could be involved as the book got bigger and bigger. And we thought that was an important consideration going forward. The way we use Katie is basically on a one on one basis. We take the client through the advisory process. She's an intricate part of that. She prepares the reports. We correspond by e-mail and telephone on a regular basis. And those of you that are out there that are not using your tech person are missing a golden opportunity. Whether you're a team and you're adding another person, it didn't cost you anything. Or whether you're a one person thing that just doesn't have the time to do everything, here's a way to free it up. Mostly what we're going after are our existing accounts. We're going after those clients that we've done business with in the past, but they've got A-shares or they've got B-shares and they've held them forever. They've never had any proper asset allocation. And this is the environment in which they're listening. And if I'm not talking to them, I know my competition is talking to them, so I want to talk to them first. The other thing about target is it presents a great deal of discipline. With the automatic rebalancing, it's a tool that is often talked about but not used often enough. This way the client knows when they're going to have it, whether it be quarterly or annually. And it is very important to us that that box ... one of those two boxes be checked off, along with the fact that we emphasize the reviews and how important the reviews are. Because none of this works unless the fourth step becomes the most important, which is the ongoing review of the client's portfolio. MM CLIENT RETENTION

W: Greg, where do you get the most resistance for target? GK: The most resistance we get from ... well, in all honesty Katie, we haven't run into a lot of resistance yet. We've geared up this program since August. We've showed it to 50 different households. Twenty of them have signed up for it and the other 30 are in the pipeline. And nobody has no yet. W: That's great. How do you track the number of target accounts that you've done? GK: Well, the system that we're using is, we're using the map which is the managed asset advisory program. I'm one who hates acronyisms(?). And it's clear there. With the filter systems, you can monitor all of your managed accounts, but you can break it up into target, you can break it up into Pima(?), you can break it up into Pru-choice, you can break it up into Max and you can combine any combinations of those four or five that you want and look at it. I mostly concentrate on the target. CM: Greg, this is Chad. I just had a question. Since you specifically chose target, and quite frankly I think it's one of the best managed account programs we have, as you mentioned particularly for clients 500,000 and below to get that all important proper asset allocation. You said you haven't had any resistance. But one of the things I commonly hear from FAs is, I'm limited in my choices. And my client wants more choices and in target I just don't have that. I agree the benefits are the discipline. Have you ever had ... GK: (Overlap) Well, I knew ... (Overlapping Comments) MM CLIENT RETENTION

GK: (Inaudible) right in the butt usually by saying point blank, why. And then just shut up (Laughter) and let them articulate why, because you'll find that it's very difficult for them to articulate why once you get past the fact that my neighbor has it. CM: Fair enough. Thank you. GK: There is one other thing that I think is important, and that is you need to know what in the world it is you're presenting. You've got to read the brochures. You've got to read the paperwork and you've got to become familiar with it. You've got to be perceived as an expert in it and you've got to believe in it. If you don't believe in asset allocation, don't do it. Because it's better for you not to do it than to do it wrong. The paperwork is pretty easy. It's one signature. All you have to do is pay attention to the opening part in the top left hand quarters (sic) to make sure whether you have for an individual retirement account or an employee benefit plan or for all other accounts. That's it. There's nothing else to do except monitor it after you get it done. And it's not difficult. And clients want it. W: Great. Well, thank you Greg, so much for being on the call. Chad, I'll turn it over to you to close. CM: Great, thank you again to Karen, Katie and Greg. I think as we heard in Greg's choice of target, he's been able to very effectively use Katie. And I think he demonstrated very well that he sees Katie as a part of his team. An additional resource or leverage that he can gain where it didn't cost him anything, and it frees up a lot of his time. It effectively takes two of the four steps off of his plate and puts it on Katie's plate, so they can work as a team on that. So again, I want to thank them for showing us a great example MM CLIENT RETENTION

of how it works well if properly embraced. And I'd like to thank Karen again. And just a final reminder that we do do this every Thursday at 4:00 p.m. on the SS4. There's some sort of client retention topic that we do talk about related to managed money. And with that, I'll go ahead and sign off. Thank you. (END OF TAPE)

IFS – A075588