Some old dogs are willing to learn new tricks. That, at least, is the hope of senior executives at commercial banks as they train personnel to go after the most sought-after customers, those worth at least $1 million.

That's the hope, too, of the top brass at securities firm and insurance brokerages who are going after the banking industry's most coveted clients.

Financial services competitors nationwide are doing what bankers historically have been loath to do - spend large sums to give their private bankers and trust executives extensive training. They're teaching them both the art of schmoozing these fickle customers, as well as the generalities and minutiae of specific financial services products being developed by the banking, securities, and insurance industries.

"On average most banks are investing somewhere between $3,000 and $4,000 annually per private banker to get them through the securities certification process over one to three years," says Bill Trigleth, senior vice president of the Cannon Financial Institute Inc. in Athens, Ga., which trains about 4,000 bankers a year. "That's a notable increase compared to five years ago, and some are spending a lot more than that as they seek to give these officers whatever it takes to help them meet their job descriptions and requirements.

"You can see that they're making a serious financial commitment. If you take a private bank with 500 being trained, it is spending $1.2 million or more. On the back end, though, they're hoping that any of these officers bringing in a single trust account will generate at least $10,000 annually in fees, more than justifying the expense."

The stakes have never been higher. On the one hand, there are more affluent customers than ever, says Mr. Trigleth, who loosely defines the "affluent" as those with net worth of $2 million to $5 million, "wealthier" those worth $5 million to $10 million, and "ultra-wealthy" anyone with more than that.

"There's no question that there's more business than ever," says Mark Palmer, director of education and sales technology for private banking services at Wells Fargo & Co. in San Francisco. "There's a heck of a lot more wealth to be transferred in the near future than in the past. At the same time, however, you've also got a lot of new wealth because the financial markets have done so well. Of course, we want to capture and intend to capture all of that business."

There is also more competition for top salespeople who can generate the business in and, more important, maintain it cradle to grave. "For years we've trained bankers on how to take wealthy customers away from brokers and insurance agents," Mr. Trigleth says. "In a sense, the brokers and agents had an edge over banks because they did a good job bringing customers in and creating wealth. They did a very good job of that.

"Where they didn't do such a great job was helping the client preserve that wealth, helping them make important tax-advantaged distributions during their lifetimes and helping them plan for tax-advantaged distribution of assets at death. We helped bankers leverage that expertise so they could take business away from the brokers and insurers."

Now Mr. Trigleth's company is helping securities and insurance firms win that business back. "These companies are asking us to train them because with the breakdown of Glass-Steagall they have the same trust and other powers that banks do," Mr. Trigleth says.

Regardless of who's stealing business from whom, all the players have the same goal: to handle any and all financial needs of wealthy individuals and couples from one stage to the next. Having a "share of wallet" is not enough.

"We want to work with these clients over their entire life cycle, working with them all the way from debt accumulation to the transferring of wealth," says Lesa Evans, director of training and senior vice president at Key Capital Partners, which serves Cleveland-based KeyCorp's wealthy customers. "We have a relationship manager who is the quarterback of our team and product specialists who are part of the team. The first thing we do for all of our clients is come up with a financial plan for them, a game plan that takes into account both the short and long term."

To gain and keep the business of wealthy consumers, banks are restructuring the teams that handle these customers. In many cases a relationship manager is in charge of bringing the business in; he or she must know enough about the breadth of products the bank can offer these customers, but is not expected to be a product expert. Rather, once the relationship manager understands what the customer's goals are, the business of developing the financial plan and executing it is turned over to the product specialists.

"For the key contact people, you have to train them in relationship management and then give them a general understanding of financial issues outside of their functional expertise, so they can recognize how to help the client," Mr. Trigleth says.

One firm specializing in training private bankers argues that bankers have a long way to go if they are to win the war with insurers and brokers. Employees of banks entering the insurance and brokerage businesses lack product expertise, a survey of private bankers and trust officers by Atlanta-based Greene Consulting Associates suggests.

For instance, 34% of respondents did not know the maximum federal tax rate for estates, 45% were unable to compare the after-tax yield of a municipal bond to that of a corporate bond, and 52% were unaware that that variable life insurance policies allow owners to determine asset allocation.

"These are very basic questions," says J. Ross Greene, a principal at Greene Consulting, whose clients include Wells Fargo and Mellon Bank. "Atypical responses? You'd like to think so.

But we are finding responses such as these to be the norm. And it doesn't matter whether the participants are from regional or national organizations, or whether they deal with the under-$1-million client or the $25 million client. If these are the responses, just imagine what they might be telling customers."

Mr. Trigleth says that whatever the barriers or problems to training may be now, he doesn't expect bankers to shy away from the task. "Even someone who has been in a bank trust department for 20 years can make the transition if you give him the right skill set," he says. "The challenge to the bank is to give them the right client assignments once they have those skill sets. They're on the way to doing just that."


Mr. Quinn is a freelance writer in Arlington, Va.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.