Taking a novel approach to market segmentation, Comerica Inc. has regrouped its private bankers into teams that look at what services wealthy clients want, rather than how much money they have.
Most private banks segment their well-heeled clients by account size. A few others - among them, KeyCorp and Harris Bankcorp - tailor services by occupation or source of wealth.
On March 31, Detroit-based Comerica organized its 400 private bankers into five teams.
Each team caters to clients with common traits and an interest in certain products and services, regardless of whether they are entrepreneurs or trust beneficiaries.
For instance, the "wealth accumulators" team concentrates on young professionals who want a lot of control over their investments but don't demand a lot of attention in person. The "wealth builders" team focuses on business owners who need both personal investment advice and access to credit for business purposes.
Rounding out the program are a "wealth management" team, which specializes in intergenerational transfers of money and related tax concerns; a trust service center for clients with irrevocable trusts, who typically tend to be older and very demanding of face-to-face service; and a trust group for clients who want one manager for all trust, investment, or loan products.
Since adopting the new approach, a Comerica official said, private banking sales have risen 20%, and client defections have declined 20%. The private bank manages $10.1 billion of assets.
An observer said Comerica's approach exemplifies private banks' quest for the best ways to approach wealthy clients in order to retain their business.
"To compete in this marketplace, banks need to make these kinds of changes," said Michael P. Kostoff, managing director of the VIP Forum, a Washington-based research firm that advises banks - including Comerica - on serving affluent clients. He added that Comerica's emphasis on client behavior sets it apart from other banks.
Comerica encourages its clients to choose what team they wish to work with. That flexibility is particularly important for clients such as extended families whose members may not all fit in one category, said David B. Stephens, executive vice president for private banking.
"We let the client decide what segment they'd like to be in," Mr. Stephens said. "We don't say, 'We've reviewed our relationship and you belong over here.'"
Comerica adopted the new strategy as a way to counteract declining sales in its private bank. The unit had begun rapid growth in 1993, when an intensive sales training program expanded the rate of new accounts by 106%, and 1994 was equally impressive. But sales slowed last year.
"It was time to validate our assumptions," Mr. Stephens said. "That caused us to go into a heavy review."
Before, Comerica had teams of investment managers, trust officers, salespeople, and lenders grouped in a structure based primarily on account size.
"We learned that asset size is only an indicator, not a determinant of what a client needs," Mr. Stephens said.
Under the new structure, only the "wealth management" team's clients are categorized by account size; they must have more than $7.5 million of assets.
