Terence Roche, Cornerstone Advisors

At BAI’s Retail Delivery Conference & Expo last year, Terence Roche and Steve Williams from Cornerstone Advisors of Scottsdale, AZ, ran a highly provocative session on “The Myths and Realities of Sales Culture” in banking. Highlights included the tip that a drawn-out account opening where a bank employee tries to capture a comprehensive view of the customer for future cross-selling opportunity doesn’t fool customers, and they don’t like it. And in focus groups no one, repeat no one, wanted wealth management advice from bank employees. It was such a success that this year BAI has asked Cornerstone to do a presentation on something else: branch scorecards. Terence Roche, a principal at Cornerstone, who has over 20 years of banking experience, expounds on what BAI attendees are hearing. If you follow banking and don’t get their emailed newsletter, GonzoBanker, you’re missing an unusual experience in banking – a thoughtful and amusing take on the industry.
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Why aren’t banks doing better at becoming trusted wealth management advisors?
Any kind of wealth management starts with the requirement for huge credibility in terms of knowledge. I just don’t know that most banks have the expertise in the branches to do this.

Banks face a conundrum. They want the branch employee to be the quarterback of the entire relationship, but they haven’t really invested the dollars in knowledge and training to make that a credible strategy. Here’s a simple example - I have asked a lot of bankers what would happen if they gave their front-line branch CSR staff a 25-question test on loans. Most admit that their staff, in the overall, wouldn’t do very well.

Opening a checking account doesn’t lead directly to a customer’s wanting to make investments through a bank branch?
No.  Checking accounts are opened for a lot of reasons, convenience being #1.  Wealth management relationships are formed when customer trust is cultivated from the expertise, approach and ethics of the relationship manager at the bank or wherever the relationship began.  What we picked up on last year in our focus groups is that the whole way a person chooses a wealth manager is very personal. Typically, people connect their relationships with financial advisors with the individuals, not with their banks.

Is that the only problem banks face in wealth management?
No. Ironically, I think they are also suffering somewhat from their success in promoting self-service like Internet banking and bill pay. The people banks drove out of the branches by signing them up for Internet banking and bill pay are the educated, affluent clients who have become completely satisfied with branchless self-service. Now, banks want their branches to cross-sell investment products to these people who are perfectly happy not visiting the branches. The most affluent went to self-service; the less affluent customers are still standing in the branch’s teller lines.

Can’t they sell wealth management through Internet banking?
What has been proven so far is that if you can sell something on the Internet, it’s with rates or fees, sometimes with an accompanying loyalty angle.

Can branches use the Internet to build relationships?
It’s tough with most of the existing systems. The typical banking customer uses an ATM, the Web or the telephone 1.7 times for every time he walks into a branch. So how is the branch going to coordinate a relationship with a customer when less than half of his or her contacts are through the branch?

Don’t CRM systems help?
They can help somewhat, but at this point most CRM or contact management systems are not well integrated with the branch system and wealth management system. If I walk into a branch and the employee wants to see my last five transactions and when they occurred, the last three times I called with a question, and the last time I signed onto Internet banking and looked at Equity loan rates, the branch employee can’t do it without going to several different systems.

Are any banks doing wealth management well?
I really admire First Republic in San Francisco. It has a very clever strategy to pass borrower information collected from jumbo mortgage applications to its wealth managers and business bankers (respecting privacy, of course). The bank’s wealth managers are very good, knowledgeable salespeople. And Katherine August-deWilde, the COO, makes it a priority to see that the wealth managers do something with the information.  They really execute well.

Anyone else getting it right?
Northern Trust targets customers with investable assets of $1 million.  A recent investor report stated that over half the millionaires in America live within a 45-minute drive of a Northern Trust office – and there are only 84! The bank has absolute focus on its core business. It’s a brilliant strategy.

To their credit, many community banks have done a very good job cross-selling wealth management or trust services to high-ticket commercial borrowers and customers, usually because there is a good relationship between the commercial bankers and the wealth management group.

These examples have one thing in common.  The banks have a laser focus on specific wealth management niches.  If you have a simple message like, ‘We sell jumbo mortgages and cross-sell wealth management services every time,’ you can make it clear to everyone in about 30 seconds what their role is. As my partner Steve Williams says, discover your niche. Banks that are successful have niches.
 
www.crnrstone.com