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Wooing deposit customers for wealth management


In the eight years since the financial crisis, the roller coaster changes within retail banking have driven large banks to more aggressively cross-sell existing customers on products and services outside of traditional loans and deposits. Slammed by a combination of low-interest rates and weak non-interest income, more retail banks have been working to sell their current deposit customers on wealth management services as a way to boost assets under management, increase income from services, and build deeper bonds with perhaps their best (and most profitable) consumers before they can be snatched away by non-bank rivals.

To tackle this challenge, banks are dedicating a great deal of time, energy and resources to the effort of profiling and cross-selling their deposit customers with a combination of business model modifications, training and incentive enhancements. However, despite all of this focus and effort on a national level, investment share-of-wallet for banks is in the low single digits and investment penetration has been flat to slightly down in the last few years. Structure, training, consistency and alignment will continue to be at the forefront of these efforts as banks use their distribution network to drive revenue with their deposit customers.  

More Options

Comerica Inc., for example, has been putting “more structure” around its wealth management program during the past two years, particularly in regards to cross-selling to deposit customers, says Michael Malone, president of Comerica Securities. “There’s been a focus on new opportunities for revenue, with interest rates coming down, and we have been looking for more alternatives as a bank,” Malone says. “And we knew our customers would be going to competitors if we didn’t offer more options.” As a result, the securities division and the retail bank together have been utilizing more metrics to track their performance on cross-selling wealth management, to better gauge what’s working and what’s not, Malone says.

As part of this effort, Comerica is encouraging (and rewarding) more cross-bank collaboration and training between the in-branch personnel and the securities and wealth management specialists. Rhonda Davenport, Comerica’s national director of sales and services for Comerica’s retail bank, says this new tack is in keeping with the bank president’s strategic focus on “leveraging current customers” and building stronger ties with them by looking at their needs more holistically.

So far, Comerica’s strategy seems to be working. In the first four months of 2016, the Dallas-based bank has increased its revenues in investment products by 54%, according to Malone, which he attributes to greater consistency, focus and structure in its program to cross-sell wealth management products and services.

Indeed, many retail banks like Comerica are taking steps to shore up cross-selling efforts, often redesigning branches and personnel staffing schedules in order to create a distribution channel that is more conducive to guiding a customer who may have stopped in to deposit a check but may have an interest in the bank’s wealth management offerings. Huntington Bancshares Inc. of Columbus, Ohio, manages investment accounts for more than 100,000 customers, most of whom also have banking relationships with Huntington’s retail or private bank, according to Doug Singer, president of the Huntington Investment Company.

Like most large retail banks, Huntington has dually registered broker-dealers and financial advisors on staff, who make rounds to several area branches to identify and meet with investors. Huntington Investment Company has grown its number of customers in registered advisory services by more than 20% since the beginning of 2015, according to Singer. Huntington offers a fee-based program which, Singer says, “allows the advisor to spend more time thinking about the strategy of managing the account and the customer, not transactions.”

“It’s really all done through relationship-building with internal customers,” Singer says, adding that Huntington bank staff and investment advisors often schedule joint appointments with prospects. While he admits that “from a product standpoint, we’re relatively homogenous, not much different than what other [banks] offer,” Singer points out that Huntington is able to bring new investors on board through in-person hand-holding while underscoring the “absolute belief that we’re better for customers if we have more of the relationship with them and their money.”

Human Interaction

While it’s no secret that younger banking and investment customers have been rapidly embracing mobile and online technologies to manage their money, many large U.S. banks are still taking a decidedly old-school approach to reaching and serving their prospective wealth management customers. Rather than trying to beat the online investment firms at their own game, big banks like Huntington and Comerica are appealing to their affluent and mass affluent deposit accountholders largely through in-person interactions at their branches.  

“There are so many solutions out there, more than there have ever been for investors,” Singer says. “But that creates an even greater need for professional advice than ever before. Even young people want the human interaction.”

As a result, Huntington does not place a high priority even on digital marketing online or at the ATM to woo would-be wealth management customers, Singer says. More often than not, he says, new investors are won through old-fashioned “proactive outreach in the branches,” and the bank keeps them through making recommendations based on the customer’s overall goals, he adds. “We focus on loyalty and the long term and doing what’s right,” Singer adds.

Meanwhile, Comerica’s more structured and targeted approach to winning over more customers to wealth management has taken shape in the form of the bank’s Licensed Financial Specialist (LFS) program, a partnership between Comerica Securities and the retail bank. Comerica’s LFS program, launched in February 2014, resulted in over $466 million in new assets and over $7.2 million in new revenue in less than two years, according the bank’s 2015 annual report.

“A big part of our success is that our financial consultants really understand how to coach and help their banking center partners with making the right introduction,” says Davenport.

With so much relying on the investment advisors themselves, Comerica is putting more emphasis on training, education, coaching, and adjusting the program – including compensation and incentives – at every level, Malone says. “And if we see an aberration in the numbers, we go back with additional training, reminders… we’re making a lot of tweaks as we go.”

Nonetheless, many banks are forced to make up for lost time when it comes to winning wealth management customers – even if they are already the bank’s deposit customers. According to a recent report by Strategy&, large banks need to contend to the damage to their reputations (wrought by the financial crisis) and mounting competition non-bank investment industry rivals and discount brokers.

And with so much emphasis on branch-based delivery and the personal touch, there’s always a concern that the customers who hardly enter branches will never get the message. But, despite the hurdles ahead, retail bankers remain confident that the opportunity is too good to miss. “We have been able to prove that when we can sell deeper with a customer, our profitability goes up,” Singer says. “And there are many customers with investments in other places who want to consolidate, who want to work with the firm with which they have the most significant relationship.”

Ms. Cable is managing director, Research & Business Intelligence, for BAI. She can be reached at [email protected].