Put Sales Reps in Trust Units? Cole Taylor Bank's Experience Pokes

Bucking a trend, Cole Taylor Bank has moved its investment representatives from its trust department to its retail division.

Most banks are trying to develop a uniform culture for trust, private banking, and retail brokerage, and are merging them under one executive. But the six investment representatives at Wheeling, Ill.-based Cole Taylor are producing more in the retail bank than they were in trust, said chief investment officer T. Scott McCartin.

"It seems to have spurred sales," Mr. McCartin said.

The $17.3 billion-asset bank made the switch because the retail brokers, who sell securities and mutual funds, weren't getting enough referrals from the trust officers or the corporate lending officers.

Mr. McCartin said the trust officers felt competitive with the brokers and the lending officers were reluctant to hand off their customers to a broker whose investment advice could potentially harm the relationships.

So the bank put group senior vice president Joseph A. Kirkeeng, director of retail banking, in charge of the retail brokers. He is overseeing the training of tellers and traditional bank sales representatives to refer customers to the reps.

They had reported to Mr. McCartin as an interim boss. Richard White, who oversaw trust and brokerage, left the bank two months ago.

Bankers have always felt that their lists of loan and deposit customers gave them a distinct advantage in selling investment products. But they continue to have problems persuading those on the traditional side of banking to refer customers to investment reps.

"It's a classic struggle inside banks," said Boston-based banking consultant A. Stewart Rose.

Many bank executives say putting trust, private banking, and retail brokerage together will instill a culture of teamwork instead of competition.

"On paper it looks good," said Mr. Rose, "but I guess at Cole Taylor it didn't work so well."

Having the investment representatives work in the retail bank helps them get to know the platform staff and receive referrals from them, Mr. McCartin said. After all, those folks are the ones who are meeting customers more appropriate for a retail broker anyway, he said.

Though Cole Taylor's primary business is lending to small and midsize businesses, the company is hardly giving up on its retail brokerage. Indeed all traditional bank employees, including the corporate lenders, are required to refer one customer per month to an investment representative; if they don't, the bank will cut at least 10% from their annual bonus.

The move hasn't engendered team spirit yet, Mr. McCartin said. "None of the bankers came to me and said, 'It's a hell of an idea.'"

But he insisted it was "long overdue" if the bank wants to survive amid brokerage-house competitors.

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