Two years after completing its takeover of Merrill Lynch, Bank of America is refining its strategy to get banking products such as debt, liquidity and cash management to the clients of financial advisers.
"We're at the epicenter of these two companies coming together," says Laurie Krupa, who was named head of the banking unit of the global wealth and investment management operation late last year.
There are a few key aspects of global wealth and investment management, Krupa said. First is product management and development. Second is the group of specialist bankers who work with financial advisers in Bank of America's various channels. There is also a group of underwriters who underwrite all the credit extended by the banking unit.
In 2010, more than 281,000 loan and deposit products were sold to customers who had an investment relationship with Merrill Lynch. Krupa says that working in combination, the advisers at Merrill Lynch and U.S. Trust and the banking experts at Bank of America offer a unique value proposition for clients.
Merrill Lynch advisers generally are not credit specialists, Krupa noted. And part of the reasoning behind GWIM Banking is that they don't have to be — the adviser can be the point of contact for all dealings with the client but bring in a specialist for banking services if needed.
"We didn't want to turn the Merrill advisers into bankers," she said. Instead, the goal is to give the advisers the ability to provide banking solutions and advice to their clients as a way to enhance the relationship.
U.S. Trust's private client advisers often have a broader credit background than those at Merrill Lynch, but they can still use GWIM's bankers for help with complex deals, or get banking products for clients through the unit.
Krupa became head of GWIM Banking after serving as the head of Wealth Management Banking within the GWIM Banking and Direct Investment division. In that role she helped build the team of wealth management bankers who now serve financial advisers through GWIM Banking. She joined Bank of America in 2004 through the acquisition of FleetBoston Financial.
She now reports to Sallie Krawcheck, president of New York-based global wealth and investment management, which had $2.238 trillion of total client assets as of Dec. 31.
In her new role, Krupa manages over 800 wealth management banking and credit specialists who partner with the more than 20,000 Merrill Lynch Financial advisers and U.S. Trust private client advisers to bring banking products to their clients.
Krupa stresses, however, that GWIM is not operating in what she called "the age of cross-sell." Instead, "it really is about delivering the enterprise." The advisers are not pushing banking products, she said, but rather responding to client needs.
As an example, Krupa said, a Merrill Lynch adviser could work with a client who is a business owner. The adviser could have taken care of all that client's personal needs, but now the business is looking for a line of credit. "It's not like they're looking to cross-sell a line of credit," she said. The request comes from the client, and then the adviser can set up that line with the help of a GWIM banker.
The operation was first created in late 2008. Last year the leadership team re-examined "the entire continuum of banking solutions" that were brought together with Merrill Lynch, U.S. Trust and Bank of America to see if new products needed to be developed, she said.
In addition, the group looked at the various offerings among the three legacy companies to see if some products were being offered to one set of clients that might be worth offering to another.
For example, she said, "we have some really interesting structured lending capabilities that were historically only offered to the ultra- high-net worth clients," through U.S. Trust. But as GWIM looked at its total client base, it realized those capabilities could be brought to clients at Merrill Lynch as well.
This year, Krupa said, "is our key year for integration" and "continuing to integrate banking into the way our advisers do business every day."
A vital part of getting these products to clients is training the advisers precisely about what GWIM Banking offers and how they can use it.
Merrill Lynch, for example, "has a very well-defined wealth management process," Krupa said. "We need to make sure that banking is integrated into that wealth management process, so it's not thought of as a secondary offering."
For clients, having banking choices alongside investments makes a lot of sense, she noted, because they tend to think about their wealth in a way that includes all kinds of accounts.
With new technology and an option to integrate their banking and investment accounts, clients and their advisers can now see everything at once, and make decisions accordingly — what Krupa calls "giving advice on both sides of the balance sheet."
To make this happen, this year GWIM Banking is incorporating information about banking products and services into the Practice Management Development training program for new advisers at Merrill, as well as in the informational sessions for top-performing advisers.
Adviser engagement and awareness is key, Krupa said. "It's evolutionary, a lot of repetition and reinforcement."
"The knowledge base that they are working from … has historically been all investment," she said, and GWIM needs to make sure the advisers understand what the banking solutions are, and how they can engage with the wealth management bankers to serve clients.
"Ultimately it really comes down to adviser relationship building, really gaining their trust that the people that they would be putting in front of their clients are knowledgeable and can provide advice and guidance," Krupa said.
However, industry observers were skeptical about whether Bank of America can sell a lot of banking products through its financial adviser channel.
Paul J. Miller, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Va., pointed out that other banks have tried this approach before, without much success.
"The cross-sale for brokers to sell banking products never really pans out as expected, but makes nice headlines," Miller said. "Brokers want to keep the relationship exclusive with them, not with the bank."
"Banks have dreams of all financial advisers cross-selling dozens of banking products and it never comes to fruition," often due to resistance from the advisers themselves, according to Charles "Chip" Roame, managing principal of Tiburon Strategic Advisers in Tiburon, Ca.
He says that advisers resist selling banking products for several reasons, including concerns that the client will be too tied to the bank if the adviser wants to move to a new firm, and worries that their relationship with the client would be put at risk if the client is turned down for a mortgage.
For these reasons, adoption of banking products can be far less than a bank hoped for, Roame said. However, "any bank product sales are a plus, with low distribution costs, so it's all a matter of perspective."
Burton Greenwald, a consultant with B.J. Greenwald & Associates in Philadelphia, said that for Bank of America to make headway selling banking products through the adviser channels, GWIM Banking is going to need to overcome the cultural differences between banking and investments, with brokers tending to be more entrepreneurial and banks more bureaucratic.
In addition, he said, many clients may not be interested in getting all financial services products from their adviser.
"The supermarket concept of financial services is still yet to be proven. When it comes to people's money, they like to go to specialized sources of expertise."
