Barrington Bank and Trust Co. in Illinois is the latest bank to launch a private banking program aimed at doctors.
Jorge Russe, a senior vice president at the community bank, a unit of the $8.2 billion-asset Wintrust Financial Corp., said it plans to present itself as a provider of personal and professional financial services for physicians.
Barrington’s program, Physicians’ Financial Care, will provide a range of products and services, such as cash management and credit, and will arrange wealth management through Wintrust’s Wayne Hummer Investments.
The program’s staff of four investment professionals also will provide referrals to local medical practice and business consultants, accountants, lawyers, insurance carriers, and information technology specialists, Mr. Russe said.
The former Citicorp executive, who called himself “the quarterback” for the program, said that if it proves successful at Barrington, it will be expanded to other Wintrust banks.
“It’s our intent to take the business across metro Chicago,” he said.
Like any major metropolitan area, Chicago is home to a large number of medical professionals. Three of the hospitals in the area— Good Shepherd Hospital, Northwest Community Hospital, and Alexian Brothers Hospital — employ about 2,000 doctors, according to the hospitals’ Web sites.
Barrington is hoping a message that is sensitive to doctors’ unique financial challenges will resonate with potential customers.
Physicians enter the work force later than most people; by the end of their residency programs, they are often 30 or 31 years old, Mr. Russe said “They’ve lost eight years of earnings, savings, and investment.”
He said he is well networked in the medical community, as a result of his marriage to an emergency room doctor, and many veteran doctors are surprised to find they have saved too little for retirement.
“Often they have become accustomed to a lifestyle that they can’t retain in retirement,” he said.
According to Mr. Russe, another practical challenge doctors face is running their practice profitably. With revenue pressure dictated by Medicare and managed care companies, many physicians would welcome the business consultants that Barrington can provide, he said.
So far the program has attracted 12 clients, including a dermatologist who opened her practice this month with financing from the bank, according to Barrington.
Though physicians have a range of products and services at their disposal, the common element in all the relationships will be either creating a financial plan or reviewing their current one, Mr. Russe said.
The program will produce income in the form of fees and interest income, depending on which services the physicians select, he said.
Part of the bank’s strategy is to welcome doctors early in their career, when they might not ordinarily have enough assets to merit a high service level, he said.
Other banking companies have specialty private wealth groups aimed at niche audiences. In May, SunTrust Banks Inc.’s private wealth management division formed specialty units to focus on medical and law school students. Over the past two years SunTrust has created groups to court other groups, such as athletes and entertainers.
The Atlanta company has 14,000 doctor and 3,800 lawyer customers. The private wealth management division serves its customers through 116 advisers in 60 markets from Maryland to Miami.
Mr. Russe said Barrington is still deciding how to spread the word about its program, aside from his personal connections.
“We are studying which kinds of marketing are effective,” he said. “Doctors are very busy, and it’s very difficult for people to get their time.”
Alistair Jessiman, managing director at the New York consulting firm Novantas LLC, said that focusing on a particular industry still is not typical for banks but could prove wise.
“It says that banks are starting to take a more demand-side approach,” he said. “It’s great from the point of view of focusing on a total solution for the client. You have a much better chance of building long-term relationships and getting more of their money.”
At the same time, doctors tend to be demanding customers, he said; because they are extremely busy and work unusual hours, bankers courting them must adjust their schedule to the doctors’.
That means a higher level of service and more cost, even though physicians “have no money” for several years early in their careers, Mr. Jessiman said.
On the bright side, doctors would gladly attend seminars a bank might run. However, they may be content just to educate themselves and not become customers, Mr. Jessiman said.
“They are professional learners, and they are very skeptical of other advisers,” he said.
