BISA Magazine - Quarter 3, 2016 - 25

cases - and at that point they will need financial advice. The idea should be to "plant seedlings," Berkowitz said, tending and nurturing those younger prospects. If and when clues indicate a millennial has migrated to a higher income or asset level, then the LBE or junior broker or customer service representative can pass on that customer to a more experienced financial advisor within the institution. The organizational structure has to be in place, however. The bank has to develop client templates for all of its clients and make them accessible by desktop computers within the branches. When a CSR or a branch manager has a conversation with a client, that conversation is added to the client's template. The institution also has to develop open lines of communication within the bank so that when actionable clues emerge (e.g., news of a new job, birth of a child), they are passed on to the appropriate parties. "The young millennial minds are full, idealistic - you can't sell them in the typical way," Berkowitz said. Their first instinct is not to sit down face-to-face with a branch-based advisor. It will take an LBE or junior broker or advisor to be mindful of hot spots like a new job, a marriage or a new home, and follow up with frequent email communication. What you really are doing up until this point is building trust. "You want to be that trusted advisor - though financial coach might be a more accurate description," Berkowitz said. Generally speaking, institutions should be wary of becoming one-trick ponies that focus exclusively on the mass affluent segment. Margins are so thin in banking that institutions do so at their own peril. In the long run, giving up on entire segments like the mass retail market carries its own risks. ▲ Will Rule Changes Change Priorities? If banks were reluctant to serve mass retail customers before, will eventual implementation of the Department of Labor's new fiduciary standard make them even less likely to do so? Popular's Peters mentioned a likely "compression of income," or a reduction in product mix and restrictions on rollovers when the DOL rule is fully implemented. "A lot of record keeping will be involved in complying with the new rule," Berkowitz said. Advisors with a lot of retirement-type accounts surely will take a hit on their compensation, he said. Key Investments' Vosen, for one, is not particularly happy with this state of affairs. After all, it's the mass retail segment that probably needs the most help with their investments. The DOL's recent fiduciary duty rule will only push advisors farther away from this group. "The people that government is trying to protect the most, they will hurt the most," he said. "That's a shame." Navy Federal doesn't expect to be severely impacted. The credit union owns both a registered investment adviser and a broker/dealer, and Wood said Navy Federal has always employed the higher fiduciary standard required for an RIA on the transactional broker/dealer side. "The fiduciary standard aligns to our values. We embrace that standard," said PNC Investments' Guerrini. Given PNC's omni-channel approach, "We're well positioned for the post-DOL world," he asserted. Indeed, they might even find a competitive advantage. If the bank had only a single delivery conduit to its mass market customers - fully licensed financial advisors alone, for example - Guerrini might be less sanguine, he said. Face-to-face advisor sales will probably become more difficult when it comes to the mass retail market. 25 BISA Magazine

Table of Contents for the Digital Edition of BISA Magazine - Quarter 3, 2016