Banks have been in the brokerage business for more than a decade, but the task of integrating two dissimilar cultures is still keeping executives busy.
Indeed, this enduring challenge was very much on the minds of the 45 high-level bank brokerage executives who gathered at the El Doral Golf Resort last week for the American Bankers Association's forum on securities sales and management.
In opening remarks at the two-day conference, J. Peter Benzie, president of Chase Manhattan Investment Services, gave a crash course on integrating brokerage operations with retail bank functions, such as trust and investment management.
The key, he said, is to allow brokers access to products and services from all areas of the bank. Bankers, he argued, need to do a better job of compensating employees who cross-sell, as a way of eliminating the territoriality that often crops up between departments.
"Make no mistake, management and compensation structures are being reexamined in almost every institution," said Mr. Benzie.
He presented some sobering figures on how banks have lost market share in areas they once dominated.
Merrill Lynch & Co. now manages $71 billion in individual retirement account money - more than the top 100 banks in the country combined - because banks have not effectively offered IRAs with the mix of investments and insured deposits that consumers now prefer, Mr. Benzie said.
Outside the meeting room, Edward R. Hipp 3d, president of Centura Securities, Rocky Mount, N.C., remarked about the challenges that his bank's brokers face.
"I want my brokers to have every capability," Mr. Hipp said. "They know where the money lies; they just need to be able to place the customer with the appropriate products and services."
The topic was well received by the audience, and was brought up again later in the day during a speech by Amy Errett, president of the Spectrem Group, a San Francisco-based consulting firm.
"When people start being penalized for working in (fiefdoms), then we'll stop talking about brokerages, and trust, and private banking" as separate entities, she said.
A midday session led by W. Anthony Turner, national sales manager for First Union Brokerage Services, attracted a lively group of 20 executives who exchanged ideas on how to communicate and enact changes in management structures at banks.
At the meeting, Stephen Burke, senior vice president at Dreyfus Corp., a giant fund company owned by Mellon Bank Corp., said bank employees were often afraid to refer business to the brokerage side because they perceive investing as risky and fear losing the banking relationship if a customer loses money.
One solution, Mr. Turner said, was to have a firm and visible commitment to the brokerage from a bank's chief executive.
Centura's Mr. Hipp agreed. "If you don't have a CEO who buys into the business, then you're finished," he said.
The ABA endured its share of problems during the first day of the conference. After Mr. Benzie's opening speech, more than a third of the room slowly filed out during talks about sales platform technology and the "psychology of sales management," a topic that left one brokerage chief scratching her head and asking, "What was all that about?"
A peer group discussion on proprietary mutual funds attracted no one, leaving Thomas Doyle, managing director of Crestar Securities Corp., without a group to moderate.
"There weren't enough signs directing people here," Mr. Doyle said. "Or maybe it's just the great weather."
