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Banks Gain in Wealth Management Marketing


While banks still face a marketing challenge in selling retirement advice and wealth management services, they are making inroads in competing against traditional brokerage firms and self-service brokerages for “mass affluent” customers.

Forty-three percent of Americans see banks as a trusted source for retirement advice, an increase from 41% in 2010, according to a 2011 survey of 4,500 U.S. households by Hearts & Wallets, a retirement and savings research firm based in Hingham, Mass. Chris J. Brown, a principal at Hearts & Wallets, cites a concerted effort by a number of banks to cross-sell wealth advisory services to their existing customers, as well as efforts to attract new customers for those services, adding that Bank of America Corp. has likely made “the biggest splash” in this arena.

The Charlotte N.C.-based bank last year nearly doubled the number of its “Merrill Edge Financial Solutions Advisors” to more than 1,000. The advisors offer guidance to people with investable assets of $50,000 to $250,000, and are located in select branches nationwide. The advisors also offer “phone-based guidance” through the “Merrill Edge Advisory Center.”

According to the Hearts & Wallets survey, 48% of BofA’s customers rely on the bank as their primary source for retirement advice, up from 27% in 2010. Other banks that also have “good penetration” in this business line include JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., Brown says.

Mass Market Relationships

As brokerage firms increase their focus on the “very affluent,” banks have been attracting more customers from the lower tier, generally those with investable assets under $500,000, Brown says. For example, while Boston-based Fidelity Investments remains the leading provider for survey respondents, the percentage of investors selecting the firm fell to 8%, from 11% in 2010 – spelling a greater opportunity for banks.

“Banks already have relationships with the mass market,” Brown says. “People like the customer service of a local bank, and when they talk to someone there, there’s a big opportunity for banks to potentially get these people to consolidate their accounts.” Even so, many banks still are not aggressively cross-selling their wealth advisory services, Brown says.

Wells Fargo is one bank that maintained its marketing budget for retirement planning services, according to Karen Wimbish, director of retail retirement for the San Francisco-based institution. She says Wells offers such services in a variety of formats, depending on how many investable assets a customer may have.

For the mass affluent, Wells offers retirement planning and other wealth management services in two ways: through “Wells Fargo Advisors,” a brokerage unit Wells inherited through its 2008 acquisition of Wachovia Corp., and through “Wealth Brokerage Services,” via licensed brokers who sit in bank branches or in hubs, and whose client base is derived from referrals and introductions by tellers and branch platform staff.

Wells markets its wealth management services through ATM ads and print and banner ads on its online banking site. Wells is also training its tellers and branch platform staff to recognize opportunities to refer customers, particularly after the employees have helped those customers complete “needs assessments,” Wimbish says.

“Fidelity and Schwab certainly have dominant market share in IRA rollovers, but they aren’t full-service institutions and, at some point, people may need mortgages, 529 plans, etc. We offer all of this,” Wimbish says, adding that Wells is seeing “a lot of traction” with its cross-selling efforts because “one in three people do business with Well Fargo.”

Lake City Bank, a unit of the $2.9 billion-asset Lakeland Financial Corp. in Warsaw, Ind., offers retirement planning advice both through its Wealth Advisory Group, which serves clients with roughly $500,000 or more in investable assets, and through its Lake City Investments representatives who serve customers in offices located in Lake City’s branches.

Jon Steiner, Lake City’s senior vice president and Wealth Advisory Group Manager, says that his bank is doing a “better job” of competing with nonbanks for customers seeking retirement planning advice, but that Lake City still has “room to grow.”

“There is plenty of business available for those people who do this well,” Steiner says. “I think nonbank competitors are able to grow their business through direct marketing, national advertising campaigns and the like. We focus on working with people we know. We rely on referral sources that we’ve developed, not only internally but also externally. So in reality, the nonbank competitors don’t get in the way of us growing our business.”

Ms. Kuehner-Hebert is a contributing writer to BAI Banking Strategies based in San Diego, Calif.