A bank sales staff's ability to effectively promote mutual fund products hinges on the use of a consultative selling approach that incorporates powerful sales messages.
A consultative sale is far different from the traditional, transaction-based selling process to which most bankers have become accustomed.
But banks that want to transform their image in the marketplace from one as "order takers" to one as "investment professionals" must cultivate consultative selling skills.
Mutual funds require a consultative and customized sales effort because that it what customers demand.
Investment products in general should be tailored to meet customers' profiles, willingness to risk, income and liquidity needs. And mutual funds are no exception.
A good investment professional will not recommend the same funds to both a 65-year-old former CD holder and a 28-year-old professional.
Clearly, the CD holder may be more concerned about current income and preservation of capital, while the younger investor may be focused on long term investment returns.
The consultative and relationship-based aspects of selling mutual fund products is a fundamental way banks can differentiate themselves from nonbank mutual fund providers.
Banks often have a unique history in the community and a certain degree of customer loyalty and trust that cannot be easily matched by competitors.
By their very nature and the self-selection process that led them to the bank channel, traditional bank customers will want a certain amount of hand-holding when contemplating mutual fund products.
These customers are not likely to feel comfortable enough with their own investment abilities to choose funds independently through newspaper ads or 800 numbers.
Simply stated, consultative selling involves a face-to-face, two-way dialogue between the customer and bank sales agent.
It is built around asking question -- and responding with the best products and solutions. It entails relationship-building and objective investment advice. It also requires that products be tailored to meet unique individual investment objectives.
When it comes to managing disintermediation, you can't stress consultative selling enough. Bankers must ask the right questions in order to match the right products to the right customers.
The Right Sales Staff
A good mutual fund sales staff is well versed in both investment and overall banking products. Mutual funds sellers in banks need to understand issues like disintermediation. They also need to know the history and context of each overall client relationship.
The traditional banker can be trained in consultative selling, as well as on the technical aspects of mutual fund products.
In addition, a significant amount of training must precede the National Association of Securities Dealers' Series 6 and Series 7 registration exams.
On the selling side, it's important to remember that not all people have the basic aptitude necessary to successfully engage in the kind of needs-oriented sales process mutual funds require.
Consultative selling simply can't be "taught" to some people. That's why it's important to focus your mutual fund efforts on sellers who have a basic inventory of skills. The objective of mutual funds sales training should be to refine and improve on these basics.
If your bank hires mutual funds sales people from the brokerage community, it's important to train them on overall bank culture, objectives and individual customer relationships.
Remember, they don't have the history or bankwide outlook that can be so important in managing both client relationships and disintermediation.
More often than not, the right mutual fund sales staff is sources from both inside and outside of the bank.
In all likelihood, you won't find enough people with the right kind of basic selling skills when eyeing prospective mutual fund sellers on your banking staff.
Over time, more and more of the right skills will be present. But in the meantime, you should hunt down and identify consultative sellers both internally and externally.
As you assess the skills that reside internally, keep in mind that there are some generational differences that must be considered.
Those professionals who have not been influenced by years and years in the traditional banking world may be more open to and comfortable with new approaches, new objectives, and new philosophies.
Look for people who have a track record of success in relationship management roles within the bank.
Often the commercial loan or personal trust and private banking officers will emerge as good candidates for mutual fund sales. Many of these professionals have both the skills and experience to play a consultative or advisory role.
Keep in mind that once you identify the right mutual fund sales staff, you must invest in them -- through long-term training programs and ongoing incentive and reward systems. This is the only way to ensure success.
Powerful Key Messages
A good consultative seller does a lot of listening and a lot of questioning. And when it's time to talk, he or she chooses the right words: Words that focus on the benefits and choices inherent in mutual fund products.
Training programs should arm mutual fund sales staffs with powerful key messages and approaches that will help them serve the customer best through a highly consultative dialogue. Bank mutual funds offer many benefits and choices, such as:
* A wide array of products that can be customized to meet individual needs.
* Ongoing face-to-face customer service and investment consultation.
* The ability to adjust portfolios over time to meet emerging personal or economic needs.
* Local presence and one-stop shopping.
* The flexibility to meet varying customers needs from different areas of the bank such as retail, commercial, and trust.
Mutual fund marketing and sales messages should be tailored and consistent.
The themes your bank highlights it's direct mail piece to a certain market segment should be the same themes that your mutual fund sales people highlight in talking with buyers from that segment.
Banks that strengthen their mutual fund programs with the right sales staff, consultative selling skills and powerful marketing and sales messages will make great strides in the race to win market share.
Banks that further complement their mutual fund programs with well-defined and carefully executed training and sales compensation strategies will be assured of a victory.
Ms. Errett is chairman of the Spectrem Group, a banking consulting firm with offices in San Francisco, Los Angeles, and New Jersey. Ms. Figueredo is a senior consultant with the firm.
