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Dreyfus Reverts to Outside Sales Approach

A push into the independent financial planning channel of Dreyfus Funds of New York, is developing at a healthy clip but is following a very different business model than the firm intended when it announced these plans early last spring. (MFMN 4/26/99)

Dreyfus had originally intended to set up an internal financial planning/independent sales support division out of New York, flying in the face of competitors' heavy reliance on outside wholesalers. Mike Millard, executive vice president and director of sales at Dreyfus, had acknowledged when the effort was initiated, the difficulty of recruiting employees to work in-house since it is expected within the industry for such positions to be stepping-stones to more prestigious, better-paying outside sales positions.

"Originally, we were thinking of an inside approach without putting outside wholesalers in place," Millard said. "We have decided to go with a full outward-bound wholesaling approach, in addition to an internal sales force, calling upon financial planners."

"Most load complexes, places like MFS and Putnam, that distribute funds through outside sales forces, have both very strong internal and external sales forces," said Dennis Dolego, director of research at Optima Group, a mutual fund distribution consulting firm headquartered in Fairfield, Conn. "To be competitive, [Dreyfus] would have to build a strong outside sales force."

Millard said Dreyfus' push to support and sell through independent financial planners was proving to be more profitable than anticipated. However, Millard declined to disclose just how profitable.

In December and January alone, Dreyfus has hired 12 new wholesalers for this new division, and plans to expand that to 20 wholesalers within the next 18 to 20 months, Millard said.

Dreyfus is enjoying success in its new push to the financial planning channel due to its strong brand-name recognition and its new business model, Millard said. Dreyfus' independent financial planning wholesalers are backed up by a division of coaches who travel with the wholesalers to help them and their financial planning clientele with their sales techniques, Millard said.

"There may be one or two other mutual fund companies offering some form of referral training, or time-management training, but I am not aware of any [other mutual fund complex] offering good old-fashioned sales training," Millard said.

Dreyfus is also trying to compete with Merrill Lynch Asset Management of New York and others by providing financial planners with such aids as data mining analyses that could, for example, project an individual's future net worth, Millard said.

Millard said Dreyfus is willing to commit its budget to sales training and data mining analyses that might not bring an immediate profit because the firm highly values its long-term commitment to this channel.

"If you are short-sighted in this business now, you are short-lived," Millard said.

In mid-February, Dreyfus is also scheduled to back up its sales-force and sales training efforts with a new wave of its "Lion Rules" advertisements. (MFMN 6/28/99)

"One of the central [themes is the idea] you don't need to go it alone," said Millard. The advertisements will begin with TV ads in mid-February, to be followed by print advertisements.

Dreyfus is more committed to intermediary, load- or wrap-fee-based sales, than it is to direct sales, Millard said. In fact, the firm's number-one bank channel salesperson consistently for the past five years, Gary Callahan, has transferred to the intermediary sales channel, Millard said.

"Gary left a multiple six-figure income to start from scratch in the new independent channel territory," Millard said. That endorsement from a number-one salesperson is a strong endorsement for the tremendous potential of this new channel for Dreyfus, Millard said.