The last half of 2008 provided the banking industry with a host of unprecedented problems. Many banks offer investments and financial planning services to their customers through internal broker-dealers or third party providers. Regardless of you distribution model, your investment department faces challenges as well. Shrinking account values, inappropriate investments, and delayed or damaged retirement plans damage customer relations. Emotions run high when customers feel (rightly or wrongly) they have been poorly advised or misled. Deteriorating client relationships in your investment department carry over to customers’ banking decisions. Follow these five simple steps to make certain your investment department provides the highest level of professional service to you customers.
Manage your Investment Advisors – Too often banks neglect to provide the same degree of oversight to their investment departments as they do to their banking operations. Manage your investment department the same as you would any other part of the bank. This requires a basic understanding of the culture, benchmarks, and processes of the investment industry, as well as management processes designed to grow business and insure exceptional service. If you have a program manager, your increased interest and knowledge will help them in their role. If you have a third-part program, assign a member of the bank’s management team to provide assistance and oversight of the operation.
Departmental Communication – Include your investment advisors in regular bank meetings and events whenever appropriate. When your investment advisors understand the bank’s focus, they are better equipped to cross-refer business. In addition, they experience the bank’s culture and expectations on a first hand basis. Insist upon a basic level of reporting that allows you to exercise proper due diligence.
Investment and Service Offerings – Know what your investment advisors sell to your customers. Be cautious about allowing your investment department to position its services as “investment management.” In most cases, bank advisors sell packaged investment products utilizing portfolio managers, such as mutual funds, variable annuities, and separately managed accounts. Most bank advisors do not pick stocks, for the most part, or exercise discretionary authority to trade securities for clients. Product and service offerings should not be so broad as to hinder the advisors’ ability to have a complete understanding of what they offer to clients.
Examine Service Standards – Know exactly what a client can expect from an advisor in the way of service. Most advisors establish and follow a service schedule that answers questions such as:
- How often will the client’s account be reviewed?
- How does the advisor segment clients for service purposes?
- What additional services are offered, and how does the client qualify for additional services?
- How is the service program administered, and who manages the service program?
Investment Policy Statements – An Investment policy statement (IPS) is a simple document, usually based upon a template, which spells out an investor’s investment goals, risk tolerance, and expected results. It also lays out a plan for how the investor will monitor his or her portfolio, as well as the advisor’s roles and responsibilities. An IPS allows the client to be clear about expectations, as well as providing the advisor with rules of engagement, in addition to acting as a compliance tool.
Consider using these strategies to enhance to value of and quality of service rendered by your investment department. A minimal amount of oversight provides customers with the best possible level of service and protects the bank’s valuable customer relationships. An investment department provides addition fee income and a more complete financial product offering, which improves bank customer retention. Make certain this star pupil continues to make its bank parent shine.
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