As the long-standing bull market temporarily fades into something less, many bank customers who have placed their assets in mutual funds will undoubtedly grow uncomfortable with risk to their principal.
For some of these bank customers, bad publicity and unaddressed fear will beget bad decisions - like disregarding long-term goals and selling at a loss,
One need not be a student of the market to understand that occasional dips are a fact of life. Even bankers new to investment services understand there's an upturn for every downturn. Over time. the market has had only one direction - up.
Yet the temptation is for many bankers to cave in to a knee-jerk reaction and sell fearful customers back tried and true certificates of deposit, rotsmatched to long-term investment objectives.
This plays to fear and fear alone. It plays to a myopic vision of banking in which there are a limited number of push-button product solutions to a customer's financial needs. And that worries me, mostly because it deprecates banking to a tactical plane. It is bad news for the future of the banking industry.
The opportunity is for bankers to own the big picture. In volatile times like these, consumers need financial management advice more than ever. They need help determining where they want to go and navigating how to get there.
Innovation at a Premium
Consumers continue to demand new thinking, new options and new products. Lots of them. The bank is the place that many customers have traditionally gone for financial management advice. But if this advice is not forthcoming from the bankers, these consumers won't hesitate to look elsewhere for innovative answers. And that is a shame.
For banks, retail investment programs are a relatively new line of business. And as with any new business, along the way there have been lumps, setbacks, and a learning curve.
While some banks have made mistakes, others have found the high road and made these programs work for their customers and their business. They have created investment services programs that offer customers impartial advice from seasoned investment reps, with proper disclosure and long-range planning.
Banks Have Made It Work
What has mc particularly optimistic is the many true success stories out there - in places as diverse as Miami and Michigan's upper peninsula.
To see these programs in action is to witness the bank of the future. One just need observe customers essentially "walking onto Wall Street" in any number of sophisticated new bank investment centers.
The evidence is convincing that these kinds of programs are not just a fad of the recent bull market, but a true fundamental of the future of banking. They will survive the damaging publicity. And they will survive the fear brought to bear by the naysayers.
Why? Because there is a consumer need. And for the most part, a consumer in need of investment advice still ranks the banker high on the list of those from whom he or she will seek answers.
There is no reason why, in this more complicated world, the bank can't address this consumer need and play its traditional role as a management adviser. There is no need to cede this ground to insurance companies, brokers. and mutual funds.
This is an opportunity for banks to step ahead of the evolutionary curve and prepare for banking in a new century. Fear? Any new ground, new direction. or change spreads fear. Let's acknowledge it, then get on with building business.
