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