In today's market, banks are competing not only for share of wallet, but for entire customer relationships. Banks need to look at the "big picture," thinking not about what is most profitable short-term but what will retain and expand relationships long-term.

The "relationship sale" that strengthens a bank-client relationship is the key to banks' success in the 21st century. Asset allocation can anchor these customer relationships for banks.

By providing an investment approach that serves clients' needs throughout their life cycles, banks can retain and grow relationships. Asset allocation is a natural next step in bank product offerings, leveraging the client base and helping to expand it.

For example, by continuing to serve clients through their retirement years, banks can expand relationships and grow with clients. The aging baby boomers and affluent markets are seeking relationship-based, full-service investment programs and are willing to pay on-going fees for this service.

By meeting these demands with asset allocation programs, banks can capture these relationships now. Additionally, Also, asset allocation programs can serve as a bridge to other products, such as trusts, down the road.

Most banks already realize the many benefits of offering retail asset allocation programs, but are moving painfully slowly from the conversation to installation stages. As time elapses, more relationships are being lost to financial services firms that offer such programs.

Speed is crucial, but equally important is the need to build a strong product and infrastructure to support and sell it.

Launching an asset allocation program may seem daunting, and banks often get mired in operational activities that do not grow assets or generate revenue.

Many banks can proceed much more efficiently by focusing on the strategic aspects where they can make a difference and outsourcing many of the other time- and resource- intensive functions to a strong administrator/distributor.

An asset allocation program should include six fundamental components: mutual funds, investment models, back-office technology, marketing support, client communication, and sales tools. Key "behind the scenes," or operational, program features to look for are automated rebalancing, a point of sale process, high-quality investor statements, and strong customer service.

Packaged programs are the most cost-effective solutions for banks. These all-in-one programs include technology and back-office support, so banks don't need to add infrastructure or overhead. Most importantly, packaged programs enable the bank to focus its limited resources where it can most contribute to growing assets and generating revenue.

To get a strong asset allocation program up and running faster, banks should apply their time and efforts to the following five strategic keys to success: Bankwide commitment and communication, program structure, compensation structure, sales/product training, and marketing.

Internal bank hurdles are perhaps the biggest obstacle to getting a program started. Bankwide dedication to the program and clear communication about its objectives are the first steps to overcoming these hurdles and establishing a successful program. Commitment to the program and its objectives must be respected by everyone in the organization from senior management to the sales force.

From the start, it is important to establish a chain of command and make clear the program structure as it relates to the organization. Who "owns" the program? Who maintains it? Who sells it?

An effective internal structure typically includes a central product manager who oversees all program functions and maintains ongoing communication with the sales force and all the departments involved. The manager works with the various departments of the bank to ensure that the product is maintained, the sales process is efficient, marketing materials are effective, and the program is running smoothly.

It is also important for senior management to remain involved after the program is up and running.

Banks must aggressively compensate the sales force to ensure that the product is promoted. The sales force's pay structure is unique to each bank, but there is one rule for all-the compensation must be commensurate with all other products that the sales force offers.

Asset allocation is not a complicated product, but training in the program and how to sell it is crucial.

The sales force should be trained in the basics of asset allocation, the bank's specific investment models, as well as how to sell the program. They should be armed with sales ideas, marketing materials, and account forms. They need to understand the importance of the relationship sales for the bank's overall success; asset allocation is a "win-win-win" sale -for the customer, the salesperson, and the bank.

A strong administrator/distributor should provide much of these resources, materials, and support.

In marketing asset allocation to a bank's clients, the program must be clearly positioned as more than just another product in the bank's lineup, but as full-service investment management competing with nonbank programs.

In positioning the program, emphasize individual investment advice, asset management, service, and the benefits of asset allocation-to which an investor would not otherwise have access. Promote the program within the bank and externally using brochures, direct mail, client communication, seminars, and statement stuffers. Again, your administrator/distributor should act as a strong partner, providing materials and support as needed.

Asset allocation programs are critical to a bank's success. They probably won't be a huge profit center, but the assets and relationships saved will be far more important to the bank's future.

In today's competitive market, banks need to look at the big picture. In the case of asset allocation, the big picture is that they cannot afford not to offer a program.

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