Banc One Vows to Return Trust Fees If Customers Say They're Not

Banc One Corp.'s trust unit is paying more than just lip service to quality-it's guaranteeing it.

The Columbus, Ohio-based banking company is promising to refund fees, in cash, to trust customers who are dissatisfied with the service they have received. The bank has been quietly rolling out the program-which it launched in Texas six years ago-to all 12 states in its market over the past 18 months.

"Once you put your fee on the line you become more concerned about client satisfaction," said Garrett H. Jamison, president of Banc One's Fiduciary and Specialized Services Group. "Yes, we give fees back, because we're not perfect."

Taking their cue from customer service giants like Nordstrom's, Lands' End and L.L. Bean & Co., other financial service firms have offered money- back service guarantees to their retail customers. But when it comes to high-end big-fee businesses like trust, few organizations have put their money where their mouth is, experts said.

Typical trust fees hover at 100 points, or roughly $10,000, for every $1 million under management. Most banks knock some basis points off of that price for larger accounts.

Banc One's investment management and trust group boasts more than 40,000 personal trust clients and some $41 billion of assets under management. But its executives say they are not worried about the guarantee's potential hit to their bottom line.

In six years in Texas, Banc One returned just $85,000 in fees to dissatisfied trust clients, Mr. Jamison said. That's small potatoes, considering that the Texas trust unit garnered over $279 million in revenues from fiduciary services last year, he said.

"If we were perfect, I would not have to do this. This is all about how to recover when you make a mistake," Mr. Jamison said. "Clients can do much worse than ask for a fee back. They could fire you and then go talk about you."

The Banc One service guarantee is unconditional and strikingly simple. "If you are not satisfied with our service quality in any given year, we will return to you the fees paid or any portion thereof that you believe is fair," the policy reads. It is followed by only a few lines of fine print that directs the unsatisfied to contact the bank within 90 days of their accounts' yearend.

Mr. Jamison, who said he was inspired to launch the program by an article in the Harvard Business Review, described the policy as a "culture- driver" rather than a sales gimmick. The guarantee is extended only to existing clients and is not used as a pitch to lure new prospects-an approach that consultants applauded.

"What it does is put a stake in the ground that the quality of customer service is a value the institution stands behind," said Jane Jelenko, the partner in charge of KPMG Peat Marwick's investment services consulting group.

Banc One expects its trust employees to respond to inquiries promptly and have "empathy" for clients, Mr. Jamison said. Statements have to be mailed on time and contain correct information. If a client invokes the guarantee, bankers are instructed to return the fee back first, apologize next, and then ask the customer to elaborate about what went wrong.

To help instill the customer-is-always-right mentality in its employees, Banc One has been holding two-day training sessions at its headquarters that 450 trust executives from the field have been attending in shifts since last month.

Even some of the trust industry's harshest critics praised Banc One's plans.

"That is something else. I've never heard of anything like this," said Standish H. Smith, founder of Heirs Inc., a Villanova., Pa.-based organization for unhappy trust beneficiaries.

But Mr. Smith, who admits he complains to Mellon Bank Corp.'s trust division on a regular basis, added he "could tear (Banc One's) system all to pieces."

"I'll find lots of reasons (to demand a service fee back). I don't like the way you treat me. Now, next year I got a different problem," he said.

But Mr. Jamison expects only a handful of customers to be "irrational" in their expectations. He said he would follow through with his policy, even when he disagrees that the bank is at fault.

"If it becomes apparent the client wants something we cannot give them, then we explain either by instrument or by law we cannot give them something," he said. "Then, we have a rational conversation."

Comerica Bank Texas has a similar program at its trust unit under which it gives back the last month's fee after a customer complains. The policy is invoked about once a year, said David A. Folz, a Comerica senior vice president and manager of personal trust services for Texas. But its impact is felt much more often.

"A lot of our customers are first-generation wealth. The trust department is a foreign place, so the statement makes us a little more friendly," he said. "Also, internally the officers take it seriously-they don't want any fees returned on their watch."

Comerica Inc.'s other trust units are considering adopting the policy, he added.

"More and more banks should be thinking about making these statements," Mr. Folz said. "Wendy's has one on the wall and so does the dry cleaners. This is what corporate America is doing."

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