BISA Magazine - Quarter 3, 2016 - 23
I
n recent years, many bank investment programs have focused
almost exclusively on the mass
affluent client segment - that is,
customers with investable assets
of between $100,000 (on the low end)
and $500,000 to $1 million (on the
high end).
It's easy to understand why: Full-time
financial advisors who drive revenue at
most retail bank brokerage programs
simply don't find it cost effective to
deal with smaller accounts. It takes an
advisor as long to sell and service a
client with $10,000 to invest as it does
a customer with $100,000. Meanwhile,
that advisor's commission is many
times higher for the $100,000 account.
There's certainly more opportunity in
the mass affluent segment than there
is in the mass retail market, said Marc
Vosen, CEO of Key Investments, Key
Bank's retail investments broker/dealer.
"Even on the insurance side, no one
can make any money selling term life
insurance to this group," he said.
at a Northeastern thrift institution. The
next big thing then was bank branches
in supermarkets. He couldn't see how
customers would open bank accounts
surrounded by boxes of Rice Krispies,
and he was right - 80 percent of them
shut down.
"The focus today is on the mass affluent. They are more profitable," said
Berkowitz. "But don't throw out the
baby with the bathwater."
Popular Community Bank (New York),
a subsidiary of Popular Inc. (Puerto
Rico), sold its branches in Illinois and
California to concentrate on the New
York metropolitan and Southern Florida
regions. But it still serves primarily low-income and moderate-income
customers. Asked about the desirability
of serving the mass retail market, Dave
Peters, senior vice president of the
bank's brokerage unit, Popular Investments, said "We can't do anything else.
It's our bread and butter."
An overreaction?
In the life insurance arena, Popular
Community works with Vantis Life, a
life carrier that focuses on the middle
market. Life insurance products account
for about 14 percent of Popular Investments' overall revenues - a high insurance ratio for a bank program. (Most
banks are below 5 percent.)
"They have gone too far, and it's very
dangerous," said Frank Berkowitz,
a consultant to the bank, insurance
and investments industries. Twenty
years ago, Berkowitz was a senior vice
president in charge of retail banking
Popular's life products include single
premium whole life insurance, simplified issue term life, fully underwritten
term with face amounts of $1 millionplus, and guaranteed issue burial insurance for older bank customers who
But are banks bypassing an opportunity by ignoring the mass retail market?
23
BISA Magazine
Table of Contents for the Digital Edition of BISA Magazine - Quarter 3, 2016
Table of Contents
BISA Magazine - Quarter 3, 2016 - Cover1
BISA Magazine - Quarter 3, 2016 - Cover2
BISA Magazine - Quarter 3, 2016 - Table of Contents
BISA Magazine - Quarter 3, 2016 - 2
BISA Magazine - Quarter 3, 2016 - 3
BISA Magazine - Quarter 3, 2016 - 4
BISA Magazine - Quarter 3, 2016 - 5
BISA Magazine - Quarter 3, 2016 - 6
BISA Magazine - Quarter 3, 2016 - 7
BISA Magazine - Quarter 3, 2016 - 8
BISA Magazine - Quarter 3, 2016 - 9
BISA Magazine - Quarter 3, 2016 - 10
BISA Magazine - Quarter 3, 2016 - 11
BISA Magazine - Quarter 3, 2016 - 12
BISA Magazine - Quarter 3, 2016 - 13
BISA Magazine - Quarter 3, 2016 - 14
BISA Magazine - Quarter 3, 2016 - 15
BISA Magazine - Quarter 3, 2016 - 16
BISA Magazine - Quarter 3, 2016 - 17
BISA Magazine - Quarter 3, 2016 - 18
BISA Magazine - Quarter 3, 2016 - 19
BISA Magazine - Quarter 3, 2016 - 20
BISA Magazine - Quarter 3, 2016 - 21
BISA Magazine - Quarter 3, 2016 - 22
BISA Magazine - Quarter 3, 2016 - 23
BISA Magazine - Quarter 3, 2016 - 24
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BISA Magazine - Quarter 3, 2016 - 26
BISA Magazine - Quarter 3, 2016 - 27
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BISA Magazine - Quarter 3, 2016 - 29
BISA Magazine - Quarter 3, 2016 - 30
BISA Magazine - Quarter 3, 2016 - 31
BISA Magazine - Quarter 3, 2016 - 32
BISA Magazine - Quarter 3, 2016 - 33
BISA Magazine - Quarter 3, 2016 - 34
BISA Magazine - Quarter 3, 2016 - 35
BISA Magazine - Quarter 3, 2016 - 36
BISA Magazine - Quarter 3, 2016 - Cover3
BISA Magazine - Quarter 3, 2016 - Cover4
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https://www.nxtbook.com/nxtbooks/bisa/2015q4
https://www.nxtbook.com/nxtbooks/bisa/2015q3
https://www.nxtbook.com/nxtbooks/bisa/2015q2
https://www.nxtbook.com/nxtbooks/bisa/2015q1
https://www.nxtbook.com/nxtbooks/bisa/2014q4
https://www.nxtbook.com/nxtbooks/bisa/2014q3
https://www.nxtbook.com/nxtbooks/bisa/2014q2
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