Wachovia aims for lucrative retirement

Once a quarter, Wachovia's top leaders convene to discuss their strategy for tapping the burgeoning retirement market. New chief executive Bob Steel recently chaired his first meeting and liked the cooperation across divisions, says John Papadopulos, the head of the bank's retirement and investment products group.

“It's good to have the boss interested in what you're working on,” says Papadopulos, who has been in his post since June.

In 2003, Wachovia established the group to develop retirement services and products and to promote their sale through the company's bankers and stock brokers. When its former head, Bob Reid, took another position in the Charlotte bank, Papadopulos was assigned the task of building on his work.

The former Wachovia investment banker has taken over a 1,500-employee unit that is a national leader in annuity insurance sales and individual retirement accounts as well as a growing provider of 401(k) plans to employers. The goal is to serve the expanding retiree population, a lucrative clientele being chased by institutions from big banks to brokerage houses to insurance firms.

In this effort, Papadopulos said, Wachovia is emphasizing products that provide customers steady income when they retire, such as annuities. The bank is continuing to stress training for its bankers and brokers who work with customers. Wachovia doesn't plan a big advertising splash like Charlotte-based Bank of America Corp. earlier this year, but it has targeted campaigns for women and certain age groups.

While the task is an important business opportunity at a turbulent time for Wachovia, “it's more of a mission, actually, especially in down markets,” says Papadopulos, citing the complex challenge Americans face in preparing for retirement. Just this spring, a Wachovia-sponsored survey found Americans at risk of burning through their retirement savings too quickly. More than a quarter of those interviewed said they were withdrawing 10 percent or more of their savings annually.

Papadopulos says the first step is to set up a retirement plan and then check it regularly. People also need to make savings a top priority, taking advantage of 401(k) plans and other options.

One of the bank's more successful pushes has been the sale of annuities, a type of insurance contract that pays out income in retirement in return for premium payments. Among bank holding companies, Wachovia was No. 1 in annuity commissions in the first quarter of 2008, bringing in $194 million, according to a report by consulting firm Michael White Associates and Symetra Financial.

Wachovia and predecessor First Union Corp. have long emphasized the product, giving it an edge over other institutions, said Mike White, president of the Radnor, Pa.-based consulting firm. The bank benefits because annuities help the company establish broader relationships with customers while providing desirable fee income.

Annuities have faced regulatory scrutiny in the past, particularly for their sale to elderly investors who may not understand the risks involved with some products.

In 2005, Bank of America, for example, reached an agreement to refund older customers after a Massachusetts investigation. The key to avoiding problems is making sure customers understand what they're buying, Papadopulos said.

Taking over Wachovia's retirement group came as a surprise to the long-time investment banker, who joined the company 12 years ago. Papadopulos, 49, jokes that he thought David Carroll, head of the company's capital management group, had the wrong number when he called him with the idea.

The move has gone well, however, and he enjoys working with the strong team he inherited, he said. And his investment banking background is useful because he had led a group that served financial institutions and insurance company clients – now providers of the products sold by his group.

Papadopulos acknowledges he took on his new role during trying times for the company, which posted a $9.1 billion second-quarter loss.

Ken Thompson, ousted as CEO in June, is a friend and mentor, he said.

While new CEO Steel has said he's considering the sale of “non-core” assets, Papadopulos said his business remains critical to the company because it serves Wachovia's profitable retail bank and brokerage operation. As a former Treasury Department official, Steel is also highly attuned to the challenges facing the nation's retirees, he said.

Amid tough times for the entire financial industry, “we just have to persevere,” Papadopulos says, “and we will.”