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Grounded Wholesalers Explore New Avenues

While the nation's airlines resumed flights a few weeks ago, some fund wholesalers remain grounded as a result of travel bans their firms imposed following the terrorist attacks. That has created a difficult situation for many fund companies that want to provide face-to-face contact with their intermediaries and producers during a difficult time, but find that getting from point A to point B is no longer a simple matter of getting on the next available flight.

Either by company mandate or by personal choice, many fund wholesalers are climbing into cars, picking up the phone or logging on to the Internet instead of boarding an airplane in order to maintain contact with their clients.

Frank Russell Company of Tacoma, Wash., was one of the firms that decided to institute a travel ban for all of its employees, said David Grieger, director of sales and marketing for Russell's investment group. A week after the disaster, the company announced a 28-day travel ban and any wholesaler who wants to fly has to get approval from an operating committee made up of company executives.

The ban reflects a company philosophy that puts personnel at the top of its priority list, even ahead of clients and producers, Grieger said. "If we take care of our people and their families, those people will take care of our customers," he said. "That's how our business has always been run."

Many of Russell's wholesalers are continuing to travel but are rerouting their trips and are hitting the road or the rails, he said. Grieger estimates that there has been a 20% reduction in overall company travel. "The company wanted to say, Hey, these are uncertain times and we don't want people to travel.'...I don't want anyone on an airplane who has a spouse who's uncomfortable with that," he said.

In order to compensate for the drop-off in travel, many of Russell's wholesalers are reaching out to their clients via telephone, Web conferences or e-mail.

Like Russell, Phoenix Investment Partners banned company travel shortly after the disaster. The decision was made as part of an effort to "ease people's minds," said Sharon Bray, a company spokeswoman. However, the firm is making exceptions for salespeople that have an urgent need to meet with a client, she said. And the wholesalers who can drive to sales meetings are being encouraged to use that option.

Leaning on Electronic Communication

Phoenix has also used electronic means to communicate with its clients and has stepped up its contact with its producers, she said. Besides adding information to its adviser Web site, the firm has been providing brokers and other intermediaries market perspective through Web casts featuring Phoenix's managers. Internal wholesalers are being encouraged to call their clients to discuss how they are doing and address their customers' concerns.

Because the firm is relying more heavily on electronic means to communicate, there is a greater push to launch a new online tool which is in the works for the company. The tool, called Shared Experience, allows Phoenix's representatives to go over a sales presentation with clients using a shared Web site. The company expects to launch the tool in the fourth quarter.

Prudential Investments has taken a slightly different tack. Like most firms, it has increasingly relied on electronic means to communicate with its sales people during the crisis and it has cut down on some travel but not all. The firm is restricting only trips that it deems unnecessary, said Richard Jiminez, head of the firm's wholesalers. That includes attending conferences and similar events, he said. The firm also circulated a notice to all of its salespeople informing them that if they had any problem with boarding a plane for a business trip, they did not have to go, he said.

Once a Trend, Now a Necessity

All of the firms' efforts to add and use online tools to communicate with clients is not uncommon and has been increased by the tragedy, said Lee Kowarski, a consultant with kasina, a New York-based e-commerce consulting firm. "Recent events and changes in travel are certainly furthering this trend," he said. "I would say that for the few companies that are limiting travel of employees that it's a valid alternative of communication and interaction, and firms are paying more attention now."

Like others in the industry, John Hancock began using teleconferences, electronic roadshows and Web casts prior to the attacks as a way to cut distribution costs, said Keith Hartstein, head of sales and marketing for John Hancock Funds.

And while Hancock has no travel restrictions in place for its employees, it has stepped up its use of electronic communication, Hartstein said. The firm has been hosting conference calls featuring its managers' commentary for broker/dealers and other intermediaries, he said.

But Hancock is also encouraging its wholesalers to get out on the road to meet face-to-face with brokers. Now, more than ever, clients want human contact with wholesalers and representatives, he said. "We have not restricted travel at all and we're strongly encouraging wholesalers to continue with their schedules. We're telling them not to call to confirm appointments but to just show up," he said.

But Hancock was forced to cancel a roadshow it scheduled for October because of the tragedy, Hartstein said. The roadshow, which was to be called "The Silver Lining Tour," will be renamed and recast as an electronic roadshow, incorporating the events of last month, he said.