ABA Banking Journal - February 2011 - (Page 58)
SPECIAL ADVERTISING SECTION ABA Banking Journal’s White Paper for February 2011: Hot Topics for Community Bankers EXECUTIVE SUMMARY For the full article go to http://www.ababj.com/white-papers-2011/ Holistic Wealth Management By: Barry L. Dayley, CFP®, RFC® www.moneyconcepts.com S tructural changes in the banking industry initiated by consumer demand and convergence of financial services have forever changed the face of community banking. In the past two and a half decades, the banking industry’s share of total U.S. household financial assets fell 44 percent to 12.4 percent, while the share of mutual funds increased 16 times to 11.4 percent. This fact, coupled with the ever increasing commoditization of traditional banking products and services offered by non-bank competitors pose a real threat to a community bank that is not able to address wealth management needs. Wealth management services are reportedly being provided by 83% of large banks, 63% of medium-sized banks, and 49% of small banks. However, many of these organizations count offering investment products or access to online financial planning calculators as their source for wealth management services. To compete in this space, a bank must offer real and practical wealth management solutions. So what is wealth management and what impact can it have on community banking? Wealth management is a specialty of financial planning. The wealth manager’s focus is the client and his efforts are devoted to helping clients achieve life goals through the proper management of their financial resources. The practice of wealth management is holistic and individually customized. Success is not measured by investment performance relative to other managers, but rather by the client’s success in meeting life goals. To illustrate the impact of true wealth management services, let me introduce you to Gerald Friedel, Vice President of Wealth Management at Itasca Bank & Trust in Itasca, Illinois. In 2000, Itasca Bank & Trust established a wealth management program working in connection with Money Concepts International, Inc. Gerry, who had been a lending Vice President and Bank President Jack Mensching, introduced the concepts of Wealth Management services to the bank and Gerry built the program from scratch. The philosophy of Itasca Bank was to offer valuable services targeting their best customers with a commitment to take all comers. Offering the customer a truly unique and holistic experience was to be the approach with an emphasis on gathering assets and fee based services. A unique 58 | ABA BANKING JOURNAL | FEBRUARY 2011 client experience customized to each individual is delivered through their systematic process of services, communications, and experiences that make the client feel appreciated or special as well as building greater confidence in achieving their life goals. In the time Itasca Bank & Trust has had their wealth manage- ment program in operation; the bank has achieved or exceeded every initial goal it set for itself though they raise the bar each year. Customer loyalty has increased, revenues are growing at a rate of 35.31% annually, and over 70% of their new clients come from referrals. In addition, they have developed a book of business totaling more than $36 million in fee-based assets under management. Not bad for a former loan officer! Their success can be traced back to several things, but delivering a unique experience has accentuated the client-oriented value of their services developing a loyal, referral giving client base. If your bank is not offering wealth management services, or if your program is not as successful as it should be, consider offering wealth management services and aligning your bank with an organization that can help you deliver these services in a way that will set your bank apart from the competition. Position your bank as your customer’s wealth mentor. This approach will broaden relationships with your customer base while enhancing banking and wealth management income and profits. Barry Dayley is Executive Vice President of Money Concepts International, Inc. and heads up their Financial Institution Program. Money Concepts International, Inc. is a full service wealth management organization. Money Concepts has been helping independent financial advisors and financial institutions deliver professional financial planning and wealth management services since 1979. E-mail: barry@moneyconcepts.com
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