While the financial services industry remains tumultuous, Milwaukee-based Quest Continuing Education has continued to grow throughout the recession, taking market share away from its competitors in the compliance training industry for financial services professionals.
Alan Krenke, chief executive officer and co-owner of the company, bought Quest in 2005. At the time, the company had five employees. Today it has 28, six of whom have been hired in the last three months. Since February of 2009, Quest has hired 15 new workers, all of whom are still with the company.
The company plans to hire another three to four workers before the end of the year.
Quest had about $2.1 million in sales in 2009 and expects more than $3 million this year, Krenke said.
A large part of Quest’s continued growth has come from its low cost model. While many of its competitors sell their compliance training programs for $125 per year per student, Quest sells its services for $25, Krenke said.
“We tooled our organization to be profitable at a much lower price point,” Krenke said. “We were at the right place at the right time. In the last 24 months of the housing market bottoming out organizations have been in a pinch.”
Many of Quest’s competitors have hundreds of employees and offices in New York City. The Milwaukee-based company has developed its own proprietary software systems that allow it to deliver easily customized training programs to clients anywhere in the country.
“Our software has been built for the student, so that all of the information they would need is on one dashboard,” Krenke said. “They know exactly what they need to do.”
Corporate compliance officers, who frequently hire companies like Quest to provide compliance training, are able to use the company’s system to keep track of which employees have completed their required training. The system is able to automatically email reminders to individuals that have not completed the training to ensure that their financial services licenses remain current.
For the last several years, Quest has focused on building its business as a third party administrator of continuing education for professionals in the insurance, mutual fund and investment management industries, becoming the dominant force in that arena.
“We have all of the clients third part administered (continuing education), except for two,” Krenke said. “There are 177 organizations that have providers in all 50 states, and about one third of those outsource for training.”
For future growth, Quest is focusing on continuing education training for financial services registered representatives.
“That’s where the opportunity is,” Krenke said. “There are 7,200 registered brokers in the U.S. and there are 1.5 million registered reps. And they all need to go through annual training. Between $150 million and $200 million is spent every year on that training. It’s a natural for us to move into that arena.”
The Financial Industry Regulatory Authority (FINRA) has stepped up enforcement of compliance training standards, Krenke said, which should help Quest grow the number of financial services registered representatives it trains.
“You can show that all of your people went through training, and that training is relevant and it’s documented – all of that is housed within our system,” he said.
Quest is now adding about four new clients per week in the continuing education for brokers and registered representative area. The company now has about 120 clients in that field. Currently, only two employees handle that department – and Krenke believes it will only take a handful more to handle what he believes will be dramatic growth.
“Most of (our clients) run with it. That’s why it’s so scalable,” he said. “It’s built for high margins and high volume, as long as it’s not too top heavy.”
