Quaker City Federal, a thrift in Whittier, Calif., has just $800 million of assets. But it has an investment products program that would do a larger institution proud, according to Laughlin Group, which stocks the thrift's shelves.
Quaker City started the program 10 years ago and says it has had no significant glitches in compliance, customer service, or sales operations.
"There have been no issues with clients even when the market has turned," said Robert C. Teeling, senior vice president of retail banking. "I don't lose any sleep over this thing."
With sales of about $16 million a year through eight branches, Mr. Teeling said, he views the program as a defensive success, keeping the thrift's customers away from larger institutions and brokerage houses.
"That's a credible effort," Geoffrey H. Bobroff said of the thrift's investment product sales numbers. "A defensive effort is better than sitting idly by and watching your deposits leave the institution on a daily basis."
Mr. Bobroff, an East Greenwich, R.I., consultant, said programs that pursue customers are preferable to defensive ones. In time, he said, such proactive programs build deeper customer relationships.
Institutions that make the move from defensive to proactive-by adding sales representatives and by other means-sometimes find that deposit balances drop initially. Those balances typically revive within three to six months, however, as people move money between investment mediums, he said.
Quaker's solid performance, said Mr. Teeling, results from a team atmosphere developed under Laila O. Pearson, sales manager. A 16-year veteran of the thrift, she has been in charge of its brokerage effort for six years. She runs a tight ship, demanding teamwork and discouraging internecine conflict.
"Laila is very strong," Mr. Teeling said. "She is extremely diligent in compliance efforts, and we pass with flying colors every year."
Ms. Pearson, who was a broker before taking the reins of the program six years ago, said too many programs do not adequately stress teamwork and communication. To build that at Quaker City, she tweaked the program setup and emphasized the importance of communication among the four brokerage employees.
In the days when she was a broker, there was a sense of being on your own, Ms. Pearson noted. To change that, the thrift moved to a dual-employee relationship with Laughlin Group, its Beaverton, Ore.-based third-party marketer.
The thrift pays the employees, but Laughlin does the licensing.
"We feel much more part of the (thrift) organization" under this arrangement, Ms. Pearson said. The setup "allows us to take better ownership of the program," Mr. Teeling said.
As part of its arrangement with Laughlin, Quaker City has direct control over which products it will offer. Unlike some others, Quaker City isn't forced to take a product it doesn't like, she said.
For example, if brokers discern a customer need for a variable annuity, Laughlin's offerings are studied, she said. The product features are taken apart to see whether they meet clients' needs. After she and her staff approve a product, it is presented to Quaker City management. None of her recommendations has been rejected, she said.
Another difference from six years ago is that there had been little communication among staff members. She set out to change that.
"We are all a team, and there's no back-stabbing," she said. "There's no taking accounts from one another."
The team meets weekly to share information and discuss developments, she said. "We train each other."
Rivalries, however, inevitably pop up. "When there is a problem like that, I immediately call them in to discuss it," she said.
When a new broker joined the team recently, she observed, one-quarter of the referrals from the eight branches were given to him every week, as is customary. But to spur his sales, Ms. Pearson turned over names of some customers who had not been contacted for more than a year. She told the other brokers of the move.
Some tension among brokers resulted, and Ms. Pearson called a meeting with two of them. The issue was quickly defused, she said. And the redistribution of customers who hadn't been contacted recently proved a strong incentive for brokers to follow up more often on idle accounts, she said.
The follow-ups are required anyway, she said. To keep track of account activity, the thrift keeps meticulous records of every customer's total financial picture. Ms. Pearson wants to know CD maturity dates, the assets in every type of account, what type of insurance is held, the value of real estate, and the customer's overall investment objective.
"We profile everybody," she said. "We want their money from Dean Witter and other savings institutions-we want all their money."
As an example, Ms. Pearson pointed to a recent sale. After profiling the client, Quaker City was able to take in more than $200,000 from the customer's accounts with other institutions. The client ended up with a better-diversified portfolio that included new accounts with the bank ranging from 401(k) and money market accounts to senior checking and CDs, she said.
With all those services under one roof, it's unlikely the customer will move his assets to another institution, she said.
Mr. Teeling takes a defensive view of the investment products business. "I view the program as another service that we are able to offer our clients to prevent them from going to brokerage firms."
Surrounded by giants like Bank of America and Wells Fargo, Quaker City is doing well out of the program, Mr. Teeling said. "I believe we've captured our fair share in terms of volume. Certainly the good point in our favor is, investment representatives are bringing in 70% to 75% of sales from outside," he said.
The four-broker team is one of the reasons, he said. Ms. Pearson, though she has a banking background herself, has no qualms about hiring investment product representatives from brokerage houses. Three of the four have that background.
She has found they ultimately mesh well with the bank culture and are motivated sellers. It is sometimes necessary, after hiring though, to ask that sales pitches be softened to fit with the more-conservative banking environment, she added.
In addition, she uses her knowledge of the predilections of bank managers to find appropriate brokers to serve certain branches. That builds teamwork too, she said.
With larger banks having a strong presence in Southern California, she complains that it is difficult to hire good brokers. To attract them to the smaller bank, she points to its support system. Two assistants do a majority of the filing for the four brokers, she said. That frees them to do more sales calls. New brokers are always surprised by the level of support, she said.
Referrals are another key form of support, with each teller in the thrift's eight branches required to provide four or more referrals per month, Ms. Pearson said. For each, the teller gets $12. But the bank also does some direct mail and educational seminars, she said.
One way of building business has been to invite the adult children of older clients to sit in on presentations, she said. The sessions help to educate children about their parents' financial situation and make them comfortable with the staff. If a parent becomes incapacitated or dies, that involvement provides a solid foundation for communication, she said.
In some cases, the children themselves have then brought accounts to the bank, she said.
Mr. Teeling said the program gives him a sense of comfort. But he'd like to see sales double to between $25 million and $30 million a year. With two branches opening in new areas for Quaker City this fall, he expects to close in on that target.
In addition, more brokers could be added. Ms. Pearson said the four brokers almost have enough to do just following up on the 3,500 accounts on the books. With new branches to serve, she plans to add at least one broker to help build new relationships.